tv Making Money With Charles Payne FOX Business August 6, 2019 2:00pm-3:00pm EDT
emulated one, maybe save apple is disney. it reports numbers after the bell, which is a name of a hit show on this very they work to get into all of that. charles payne with his own hit show beginning right now. hey, charles. charles: good afternoon, everyone, i'm charles payne. this is "making money." breaking right now the stock market rebound gets hit by a dove. market turned lower after word from st. louis fed president actually spooked investors. buyers as you can see are beginning to reemerge. we're all over the markets, with the fight over china's currency. china warning hong kong protesters they're playing with fire. the strength they're showing is not weakness s this situation about to get a whole lot worse? all living fed chairs banning together to support jay powell, calling out the importance of the central bank's independence.
i'm talking about why they need more scrutiny, not less. all that and more on "making money." ♪ charles: we got a slight rebound this morning, this after china sort of stepped up their efforts. they raised the value of the yuan just slightly, but that is in response to the united states yesterday calling beijing a currency manipulator. i want to go to edward lawrence. he has more with us from the white house. how the trade war has turned into a war of words. edward? reporter: exactly, charles, that war of words is taking on to twitter too, the president saying he will protect farmers, saying the president hinting the fact if there is another bailout down the road, if china does not turn around to buy u.s. agriculture, the president is highlighting the fact that money is coming into the u.s. economy because our fundamentals are strong. but on twitter he said this, as they have learned in the past two years our great american farmers know that china will not be able to hurt them. that their president stood with
them. has done what no other president would do, i will do it again next year if necessary. the tray tensions are es escalating. white who us economic advisors say targeting the president's political base will not help them. >> we'll help them more if need be and we'll see how the negotiations go. reporter: the treasury department labeled china a currency manipulator. that triggers the international monetary fund to work as a mediator to work with negotiations. the treasury department comes up with a report, recommendations how china can be moved from the list. there are a few recommendations they already made. china needs to balance the imbalance in the trade at that we have back and forth with the night and china. also, be more transparent with the exchange rate that they have there and how that comes about. also china needs to be more transparent with how their reserve management operations work behind the scenes with the central bank. now the white house planning to
wait out china's economy here, saying that they can handle this, because the economic fundamentals in the u.s. are strong. >> they're in poor shape economically. we're in great shape economically. frankly the biggest loser is china. reporter: china denies it manipulate its currency. they released a statement that this will cause global chaos that the u.s. took this action. the u.s. trade delegation is expecting a chinese delegation to come here in september. they are planning for that. the president said if those talks go well, then a 10% tariff on rest of everything that china imports into the u.s. may go away. if it does not go well, the president hinting that could be 25% tariff. back to you, charles. neil: edward lawrence, thank you very much. what does the latest back and forth between the two powers mean for the trade negotiations? here with insight, former u.s. ambassador to china, max baucus. thank you for joining us.
what do you make, the war of words are up, both sides taken next steps but no one canceled this next meeting. this still feels like there are occasional olive branch out there. can you handicap where we go from here? >> i hope we continue to negotiate. our last meeting was in shanghai. there was no resolution. sometimes with negotiations there are not resolutions many frankly i think it was a mistake for the united states to add another 10% tariff even though the negotiations have been going okay, i'm not all surprised that china let their currency deevaluate a little bit. this question of currency manipulation is interesting one. china has spent more time propping up value of their currency over last several years, rather than letting it fall. so if they're a manipulator they're doing it the right way, not the wrong way.
serving in china i learned a couple things. number one the chinese are very strong, they're very tough. they will not be bullied. they're very smart. if the united states thinks they can bully china they're make a mistake. they cannot. china would want to make a deal. they would like to make a agreement with the united states. that is very clear. but an agreement that is fair. an agreement they don't lose faith. the real solution as i see it, both sides, okay, let's cool it a little bit. both sides win if they both back off, basically the same way. then the united states -- other concerns we have over china by working with other countries. i think that is the way -- charles: interesting you use the word bully because many people believe this is a fight that america should have taken on decade ago in that we have been abused, world trade organization has been abused and american consumers and american workers have paid a extreme, certainly american workers have paid a heavy price for it.
in the past china has made a lot of agreements. they made a lot of promises and they broke them all. the fact they hadn't even done the simplest thing up their agricultural buys, i think that is what triggered president trump's threat of an additional tariff. isn't it time some president, maybe throws away the old playbook because they know how to game the old playbook, they have done it successfully to their advantage for a long time? >> it is true china has taken advantage of the united states and we attempted not to respond as much as we should have. also true sometimes they make commitments and frankly don't live up to them. yes, we need a new playbook, that begs the question what playbook? the current new playbook is one not working. it is really causing havoc in the world trading community, world investment community. china is resisting approach the united states is taking. the better playbook for me,
frankly, hard to do, but it has to be done, for our president to be okay, he will work with other american companies, business community, with labor, civic groups, work together as team and work with other countries. we have to the worked well with other countries. we have done the opposite. [inaudible]. tariffs, steve tariffs and so forth, we slapped on other countries. to -- [inaudible] western countries, like minded countries have to work together. we seen it work in the past, if we don't work together the china will divide and conquer. charles: ambassador, hope you're right. listen a lot of people feel like the status quo really lined the pockets of big business. they probably wouldn't be the right partner with respect to a solution, they have an ulterior motive, whether they like indentured servants or otherwise. i don't know if the american
public will wait for france to get the nerve as they're dangling out that silk road money. thank you. >> you bet. charles: the dow below of the 26,000-dollar mark after yesterday's selloff. here for what is next, danny hughes, bellpointe chief market strategist, david nelson. got to start with you, danny. great seeing you, it has been way too long. you've seen this kind of markets in the past because it has a lot of people rattled in part because we don't know the next move on china war trade battle. we don't know what will happen with the fed. there are a lot of unknowns. >> there is always uncertainty. that's why we're here, to talk to investors and shed light on what possibly could happen. don't forget in january of 2018, we hit new highs, and fresh new highs of july this year and we had major downturn since then, 20%, 13 1/2%, 6%, but the market
continues to recover. what that says there is always opportunity out there. we always have to play the long game. i think anything going on, brexit, china, the, declining yield, all of this stuff is major news and headline news to investors but you can't trade on the news. you have got to really be invested for the long haul. charles: david? >> i would have to echo the same. we live in a new world. it is always going to be, there is geopolitical hot spot. charles: do you believe it is magnified bit financial press, internet, things like that, that some of these things may have been going on in the past but the general public didn't understand it, even though they couldn't name one fed official, let alone who is speaking today or tomorrow? >> you know, you have the corner deli, talking about the balance sheet of federal reserve. charles: which might be a good thing. >> that is kind of a warning sign right there. i want to respond to what the ambassador said. just because china is tough
competitor and tough negotiator doesn't mean we should shy away from a fight. i think, what is happening here iser what -- we're seeing reset of expectations. let's call it what it is. this is i think decoupling of the two largest economies in the world. that may be in the end better way to go. charles: is the world large enough for both countries to problem produce and decoupling scenario? >> i believe in abundance, charles and i think so. the thing questionable to me, the president run on economic health of america and by proxy really the economic health of the stock market is risking it all to play this game that has been going on since the first quarter of kicking this can down the road with respect to the trade question. and, we're seeing the results of that, with the volatility of the market. charles: right. so the, david, it is interesting, because we get up, obviously the market always gone down a lot faster than it goes up. so a lot of people are rattled. >> sure. >> in the middle of this there is a lot of fuse out there.
we're in the final innings of earnings season that has not been talked about a lot. the economy has not been talked a about alot. the headlines, sometimes they're headwinds, sometimes they're tailwinds, ultimately we're not sure. >> it will come down to the earnings stream. for a lot of companies we're stepping over a lower bar. stocks are not living in a vacuum. interest rates are important. in that dynamic multiples move higher. a lot of these companies are pre reasonable prospects in 1.7% 10-year treasury world. a lot of these names i own, i will continue to own. charles: dani? >> the in the sovereign markets you have 12 to $13 trillion of less than zero yield. charles: you're okay with the market, new volatility notwithstanding the bottom line, stay the course? >> stay the course. you have to always play the
market in order to win. charles: dani, great to see you. david, you too. did we get the memo on the tie? see y'all later. drug wholesalers amerisourcebergen, cardinal health, mckesson they're all getting hit after bloomberg reporting that they proposed a 10 billion-dollar settlement over the opioid claims. the national association of attorneys general had accused the three of fueling that epidemic. it is reportedly countering with an offer, they're demanding 45 billion. remains uncertain to see what side, if the two sides can reach a deal but those stocks are undera lot of pressure. higher prices, layoffs, small business misery, unintended consequences after new york city hiked it is minimum wayne to $15 f the big apple can't afford it, what does it mean for the rest of the country? china's new warning to hong kong protesters, don't play with fire. are the tanks about to roll in? that's next.
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charles: beijing issuing a strong warning to protesters in hong kong that they have quote, gone way beyond the scope of freedom of assembly and demonstration. that those that choose to play with fire quote,. they disrupt the public transportation, delayed, canceled hundreds of flights in and out of the city. susan li joins me to discuss. you could feel over the last several days where the rhetoric from the chinese side, whether the guy in charge of the pla garrison or keen carrie lam,
gotten to the point where they're setting up excuses to really go, physically harm these protesters? >> i am cautious on that because i know china did say, they vowed to punish hong kong protesters who break the law. yes they arrested 148 people on monday. disrupted transport system, 200 flights were canceled. disrupted subway system and main road called harcourt up to the government offices but i also heard from china, mccow, hong kong affairs office, saying hong kong police and hong kong government are fully capable of punishing criminal activities on their own, restoring public order. that is more encouraging, china and beijing are saying local hong kong issue, local authorities will deal with this. there are concerns it will be a repeat, some say of tianamen square and tanks would roll in. for me to hear this from the china hong kong affairs office is more encouraging as more of a local issue. charles: what do you think
happens though if they don't stop protesting? because again the warnings seem to be there. it is good that the hong kong officials are saying hey, we can handle this, but china is becoming louder and louder with respect to the frustration with all of it? >> i think there are three outcomes. either the protests peter out. the government steps in, what we call martial law, that is least likely, according to me and people i talk to in hong kong or they go in and arrest some of the protesters, get rid of carrie lam, and a whole new regime starts in hong kong. i don't think beijing needs to roll in the tanks because they are getting everything they need at this point. they go in, kidnap people off the streets of hong kong. somehow they end up in main land china. they didn't even need extradition, to basically ship expats and hong kong resident to face china. they have already been doing this. what benefits do they get to, you know, have 24 hour global
news channels cover this? it hurts their monetary system and financial markets. charles: i'm getting a wrap, but very quickly, any chance what is happening in hong kong could influence people in main land china? >> that is the main concern for beijing right now. it is also very censored in china. charles: susan, thank you very much. appreciate it. the dow hitting session highs at this moment. why global buying yields may make a next move regardless how hard they want to resist that. plus is the federal reserve's power grab upon too far, while four former chairs are calling for independence, i'm calling for accountability. we'll be right back. ♪ fact is, every insurance company hopes you drive safely. but allstate actually helps you drive safely...
charles: bond yields across the globe are plunging while our yields here at home are around, you know, where they are. german government bonds for three months, 30 years, all offering negative yields. for the first time and while japan 30-year slightly above zero. the question will this actually put even more pressure on the fed when they make their next move? we have mitch rochelle to help hash this all out. that is interesting, because that q&a i thought was really strange with jay powell the last time at the end of the fomc meeting, i thought he spent a lot of time, in my mind taking shots at president trump and the question is, where rates are around the world, $14.5 trillions worth of bonds with zero yield, how can the fed, you know, stay so much further above? it doesn't seem like a lot, but we're a lot further above it overseer row than anyone else? >> the big question is currency,
chars. currency will continue to shift, if dollars come across the world to buy treasurys and buy dollars in the process. we have currency rates, trade war, all of those things are intertwined. the fed probably will have to do something. the fact of the matter currency issue will be top of mind as they meet in september? charles: how will that influence the fed? >> i think they're worried about inflationary factors. one of the fed's mandates is inflation. if we inflate our dollar we grate deflation. i think it is all interconnected. i have a feeling they will be talking about the inflationary qualities of the tariffs and potentially moves that would devalue our currency, create inflation. charles: we opened this morning with an okay bounce. almost got to 26,000. james bullard, who calls himself the biggest dove on the fed, urged caution or said we need to see where things are.
on one hand you have the most dovish fed official, saying maybe one more, but we got to start, you know, wait a little bit to see impact, but coming into today, there was 74% chance of a 50 basis point cut in september. 73% chance of a 25% cut, 20 basis point cut, december, even going out to march of next year, over 50% chance the fed would still cut rates. so four rate cuts, so i mean wall street and the fed at least, officially, so far apart. how do you account for that? >> the bond market is definitely sending a signal to the fed we want rates lower because we want to continue this growth cycle. the only way to continue the growth cycle is to get businesses to invest. as a matter of fact on consumer side of equation, the consumers are great where rates were. the housing market benefit from 100 basis point or lower rate, they were 100 basis points higher back in november. that doesn't seem to be helping. the real thing to get businesses to invest. the question becomes if you
lower cost of capital by half a percent, does that really get businesses to start to invest? i think bigger issue is uncertainty. they're not investing because of uncertainty. charles: despite the fact that the rates -- >> really, really compelling. they're not going to invest if they're worried they don't know what the future holds from a trade perspective. charles: conversely once the trade situation is resolved, rate may go back up? >> very likely. the question what happens around the world. rates are so low. you talked about it at the top, up to $15 trillion worth of sovereign debt around the world. how about all the corporate debt indexed to the sovereign currencies could be over $20 trillion. the flight to quality will always come to the u.s. and buy treasurys. charles: all right. >> we may not have control over that. the markets may be doing something different than what the fed wants to do. charles: mitch, thank you very much. >> charles, thank you. charles: the luxury shopping destination where mitch gets most his threads, barney's of new york filing for bankruptcy. the latest victim of move to online shopping.
they might have have lost the cool factor. for this particular company, rising real estate costs. they will close stores in chicago, las vegas and seattle, 12 other concept stores, warehouse locations. store in new york, new york, boston, san francisco, beverly hills will remain open. >> is there a sale? charles: no. four former fed chairs are defending a independent federal reserve, want it to be free from political pressure in a new "wall street journal" op-ed. my take is there no one more powerful than the fed and they are grabbing more power. i will go into why we need more accountability for our independent central bank. ♪ staying active? on it. audrey thinks she's doing all she can to manage her type 2 diabetes and heart disease but is her treatment doing enough to lower her heart risk?
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♪ charles: powerful new op-ed about the federal reserve needing independence today. i get why the fed feels independence is crucial to doing its job but arguably the most powerful entity in the world, and there is very little accountability already there. moreover the fed shouldn't be above criticism. think about this in a world of greater scrutiny where anyone can rate any business on google, facebook, yelp, travel, local business on angie's book, you can opine on movies on rotten tomatoes, the fed shut get more scrutiny. i worry the fed her main street
he specially managing risk and managing it into the great recession. guess what? since then they have been rewarded with more responsibilities. they have oversight of the federal reserve system. they perform five key functions to promote the health. u.s. economy. there are three key systems entities, board of governors, federal reserve banks, and federal open markets committee. they also conduct monetary policy which is supposed to promote maximum employment, stable prices, and moderate long-term interest rates. they also have the task of promoting financial system stability. so they monitor financial systems for a healthy u.s. economy, instead of looking out for house holes, businesses an communities. supervising an regulating financial institutions an activities. also they foster payments and settlement systems, safety and efficiency. also since the great recession they're now promoting consumer protection and community development. this means me back to the timing of the op-ed in the "wall street journal" from all four living fed chairs,
emphasizing the belief that fed and its leaders should be independent, writing, it is crucial to preserve the federal reserve's ability to make decisions based on the best interests of the nation, not interests of small group of politicians. everyone is talking about this, deflects from the story that nobody is talking about, the next power grab. the fed is setting up payment system that will compete with private business. the fed vote the 4-1 to go through with this, randall quarles stating i dot not see a strong justification for federal reserve to move into the area, to crowd out private sector innovation where alternatives ares are available. i don't like all the tweet about the fed but they need to be called out from time to time. more importantly they need to be more transparent and more accountable. joining me to discuss it jack ablin. i'm not sure how you feel about it, the federal reserve, i can't think of any entity in the world this powerful with lack
oversight. answering questions every six months from maxine waters is not enough accountability for me? >> well, yeah, keep in mind, charles, the fed does ultimately report to congress. just like you know, you and i, are free to make individual decisions on our jobs eventually we'll be evaluated and you know, determined whether or not we did a good job at what we're doing or not. so i do think that the fed does deserve and need some portion of independence to make individual policy decisions so that they're not bending to the will of whatever parties are in power. on the other hand of course they do report to congress and, you know, we can look back on some of the things they have done to see whether it was good or bad. take, for example, president bush's, president gw bush's re-election in 1992. it was argued by the republicans back in those days that greenspan didn't lower rates
fast enough going into the 1991 recession to help george bush gain re-election. of course he lost to clinton, but that was one of the things that, you know, the fed has been plamed -- blamed in the past. they are ultimately held accountable at a higher level rather than individual policy moves. charles: what about the idea they take on more responsiblities, jack? when the fed was created we were told there would be no more crazy gyrations, wild business cycles of boom and bust. since then we've had a couple dozen recessions. the great depression, more recently the great recession. now they will take over, be a competitor to the private business and the payment system. is that too much? >> that may be. i think that could be crossing the line. my sense is, maybe my skeptical sense, charles, is, that the fed wants to create an electronic system for couple reasons. one, wants to know where all the
money is. two, it can institute negative interest rates with impunity, right? one of the fears that the fed has is if they start to impose negative interest rates there will be runs on the bank, cash under the mattress will be doing better than minus 2% yield. they're trying to set things up where they have more control, or at least more oversight of what is going on with payments. that to me may be crossing the line. charles: another reason for their adamant opposition to libra, which would be a rival to that. jack, always appreciate being able to tap into your expertise and knowledge. thank you. >> thank you, charles. charles: stocks extending their gains after yesterday's steep declines. we will be following up on this rebound as we go into the final hour of trading. new york city businesses are struggling. news flash, they are struggling since the city imposed a $15 minimum wage increase. it is not just the owners of these businesses but their employees are struggling as
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would you mind passing my book there. once again, that's... and financing is available for qualified purchasers. charles: well, this year new york city enacted a $15 minimum wage to much, much fanfare. well turned into a rally cry, in fact, for the 2020 democratic candidates. many people say, listen this is great for workers, but i got to tell you something, maybe not. really turns out it hasn't been that great for business owners either, according to a "wall street journal" article, six months after the law went into effect. owners are forced to cut staff, eliminate shifts and raise their prices. this is the question, if new york city the big apple can't afford it, how can birmingham? here to discuss deroy murdoch and liberal commentator, danielle mcglock lynn. you're one of the advocates.
i don't care what the topics, debt in belarus we need to do something about it. all right. now it is in practice this is not a theory. it is in practice. new york city the richest city in america, small businesses are getting hurt, employees are losing jobs or time and prices are going up. >> right. so what is happening what advocates didn't want to see happen, as you say, we're seeing job losses. we're seeing in restaurants for example, customers are paying more for food. it is not clear that one size fits all frankly for minimum wage and what we should be doing is tying it to standard of living. across 29 states not tied to the federal minimum wage laws, we're seeing average of about, about $12 an hour at this point. cities and states are doing their own thing. and mandating minimum wage rises. honestly i think that is where it should be. charles: one congresswoman want ad 20-dollar minimum wage recently. >> that's right. charles: 15 is the rally cry for the democrat party, those running for office?
>> yeah, except congresswoman tlaib from michigan, one of "the squad" if you will, she says 20. it is not fight for 15. it is becoming a fight for 20. this is totally self-defeating idea. bernie sanders of all people, been screaming for 15 an hour, turns out he is paying his employees 13. they complained. rather than move them up to 15, cut their hours, so on average they're making 15. could make, 5, 10, 15, 20, employers can't afford it will cuff hours to match budget you have. you end up with workers getting more per hour technically but fewer hours, they don't take home money than they did before. often less. >> there is base being policy question, how do we make sure that taxpayers are not subsidizing employers by forcing people on to food stamps -- charles: you can also argue employers are subsidizing the government making those food stamp payments less. are you concerned, here is one
of my big concerns, beyond the economics of it, if you pay people so-called living wage for minimal skills what is incentive for them to become a better person, hey, the government mandated that the businesses pay me a certain amount of money. i'm going to get paid 50 grand a year even if i dropped out of high school. why would he become a better person if i got a guaranteed amount of money coming in? >> that is a concern. the concern if you have a pool too high, people with no experience aren't going to get the jobs, because people a lot of experience hired into the roles. i do agree with you, charles. we should write this down. this is state, city, region specific. and i know that it is very popular politically with democrats. that is why we see rallying but in practice you don't want to do thing you harm people you help. charles: that gets to the real issue, deroy. we can crunch the numbers, say hey in practice these things don't work, alternatively what
the candidates say we're an unfair system where the rich are ultrawealthy and incumbent upon the government to make it right, forgetting about the xs and os, "medicare for all." who cares if it is $100 trillion it is the right thing to do, that seems to be resonating. >> maybe the right thing to do is thinking way too small. why not $100 an hour minimum? people working 40 hours a week, would make $208,000. wouldn't that be beautiful. we can't afford that. that would be ridiculous. charles: you would never be president? you know you never would be president. >> if nominated i will not run f elected i will not serve. charles: thank you both very much. apple's branded credit card, folks will be rolling out today. apple announced the card back in march, will be used primarily for mobile use. they will get invites through the apple wallet app. it is being offered in partnership with goldman sachs. the u.s. china trade war
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charles: gloves back off between president trump and xi in the china trade war with both sides coming back with blows back-to-back. what is next for the administration? joining to us discuss former commerce department deputy director chris garcia. we had the threat of additional 10% tariffs on $300 billion worth of goods and services not already tariffed. china allows the currency to go
seven to one with the dollar. they backed off on that. then we called them a currency manipulator. that feels like maybe the initial tool set but what's next? it feels like the next blows will be a lot harsher? >> how the united states responds to the dispute with china with trade policy will chart the course of history the next 50 years and i believe what the administration is signaling now the u.s. companies have to get out of china. if there is a way -- we've been programing everything has to be manufactured in china for things to be cost effective. that is not true. we programmed to believe not distort the market by not confronting china. that is not true. we have to stand up to them. the move is to incentivize in some nation trade tariffs that u.s. companies should be moving outside of china, move in neighboring countries with china. we have great elasticity here. we can purchase products, manufacture products from
countries not engaging in bad behaviors china is doing. take a look at that option, take a look what we do with the imf, how we approach this whole designation as a currency manipulator for china. we'll be watching the administration very carefully. charles: chris that is intriguing, it is brought up, even in the first half the year, china is number three source of our exports from following mexico and canada, but businesses, particularly large businesses are going to say, what about that $1.4 billion consumer base? are you saying it is a worthwhile to give up manufacturing in china and also give up that large, growing consumer base as well? because that is 150, $160 billion a year we would be giving up, something like that? >> if private businesses voluntarily decide to minimize their risk, looking for different sources in the supply chain that -- charles: i'm not talk, i'm with you on the supply chain side, i'm with you on that, but what
about companies selling into china. if there is retaliation, china and government and citizens will be pretty upset if we pull all the supply chain out, economy continues to crumble, what do we say for the businesses out there trying to sell to those consumers? >> we've seen larry kudlow this morning talked about how we need to come back to the table, look for amicable solution. ultimately we're not trying to find an armageddon out come with china. we don't want to eliminate that $1.6 billion consumer base. what i would say, if private businesses are operating in truly free, fair, reciprocal trading arrangement with china, we'll need to agree not just the administration, it is private businesses have to also voluntarily put pressure on china with how they manufacture. so you know the both are connected, chars, but when, at what point in history has appeasement of someone who is a bad actor worked out well? i can't remember the last time that worked out well. we have to take action and
confront them while we have cushion with the roaring hot economy. charles: it would be great if big business helped out more. we understand their margins could be hurt a little bit but long-term benefits all americans including american businesses. always enjoy the covers. >> thanks, charles. charles: the market extending its rebound after the biggest loss of the year so can the dow snap its five day losing streak? looks like we're on course but can it pick up more momentum? what happens tomorrow is disney reporting after the bell today. we'll update the battle the company has with netflix. we'll get you through the last hour of trading. we'll be right back. ♪ (vo) the ant mindlessly marches on. carrying up to 50 times its body weight. it never questions the tasks at hand. but this year, there's a more thrilling path to follow. (father) kids...
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