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tv   World Business Report  BBC News  June 16, 2022 5:30am-6:01am BST

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this is bbc news with the latest business headlines for viewers in the uk and around the world. the biggest rate rise since 1994. the us federal reserve hikes borrowing costs 0.75% as inflation hits a four—decade high. we at the federal bank understand the hardship high inflation has caused, we are strongly committed to bringing inflation down now we will be moving expeditiously to do so. all eyes now on the bank of england. it's expected to raise interest rates too. but will it be enough to stop the pounds downward spiral? the return of the eurozone debt crisis. europe's central bank scrambles to reassure bond markets as borrowing costs surge for italy and greece
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plus — the crypto crash deepens. could it spell disaster for el salvador�*s multi—million dollar gamble on bitcoin? we start in the us — where the federal reserve has announced the biggest rise in borrowing costs in 28 years. the fed raised its key interest rate by three quarters of a percent — and signalled more big increases are on the cards. as our correspondent michelle fleury reports, from washington, it's battling to control the worst inflation in four decades. intensifying its five figure inflation which is currently at a a0 year high reserve raised its key interest rate by three quarters of a percentage point
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to a range of 1.5 to one and three quarters of a percent, move that will push up borrowing costs for and company. us interest rates haven't been hiked by this much in one go since bill clinton was in the white house in 199a, the size of the mood something federal chair reflected on during his press conference. clearly the 75 basis point is an unusually large one and i don't — an unusually large one and i don't expect moves like to be common _ don't expect moves like to be common. from the perspective of today— common. from the perspective of today are — common. from the perspective of today are 50 or 75 basis point increase _ today are 50 or 75 basis point increase seems most likely at the next — increase seems most likely at the next meeting. we will make our decisions meeting by meeting and continue to communicate our thinking as clearly— communicate our thinking as clearly as_ communicate our thinking as clearly as you can. previously it signalled — clearly as you can. previously it signalled its _ clearly as you can. previously it signalled its intent - clearly as you can. previously it signalled its intent to - it signalled its intent to hiked by a small amount but it decided to move more aggressively after the economic date on friday showed us and patient rising at its fastest pace since 1981 and inflation
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expectations growing, implying americans are getting more worried about the economic picture. as to the future direction of travel officials expect rates could reach 3.a% by the end of this year. expect rates could reach 3.496 by the end of this year.- by the end of this year. that was new _ by the end of this year. that was new york. _ attention now shifts to the city of london, where the bank of england makes its own decision on interest rates in a few hours' time. it's expected to raise borrowing costs again to try and control soaring inflation — they're currently at 1%. but it faces a dilemma, with the uk economy on the brink of recession after it shrank in march and april. kallum pickering is senior economist at berenberg private bank here in london. let's talk about the uk and compare it with what's happening in the united states. first the bank of england what you think it will announce today? you think it will announce toda ? ~ you think it will announce toda? ~ , today? the bank will probably announce _ today? the bank will probably announce a — today? the bank will probably announce a 25 _
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today? the bank will probably announce a 25 basis _ today? the bank will probably announce a 25 basis point - announce a 25 basis point increase but there is a chance it could be 50 basis points because the bank of england sets interest rates on a committee bases, there are nine members and in the last meeting three members voted for 50 basis points so it's possible the balance could swing in favour of that kind of move. and what's your take on how the bank of england is navigating the situation we are in currently as far as the uk economy is concerned? we have to do a lot _ economy is concerned? we have to do a lot of _ economy is concerned? we have to do a lot of digging _ economy is concerned? we have to do a lot of digging in - economy is concerned? we have to do a lot of digging in the - to do a lot of digging in the details to figure out what is going on in the —— uk economy you mentioned it shrank in march and april but if you strip away the government testing, the economy continue to expand, labour market is looking pretty good, consumer spending surprisingly seems to be holding up, the bank of england is worried there is more demand than you might expect in the economy and that would risk my inflation and that's why the bank needs to keep winning against this to
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make sure we don't expect much higher inflation in the future which becomes self—fulfilling. can we compare the labour market in the uk to the us because economists i spoke to this week about the royal bank move says what's good about the us is the labour market is strong, is it at strange pace in in uk with some businesses struggling to hire the people they need and wages are going higher? they need and wages are going hiuher? . �* , they need and wages are going hiuher? ., �*, ., higher? that's not true the uk labour market _ higher? that's not true the uk labour market is _ higher? that's not true the uk labour market is much - higher? that's not true the uk labour market is much better. labour market is much better than the us, we have much higher participation and unemployment is lower and wages are growing faster, we have much less of an imbalance between very strong labour demand and what is happening on the supply side, i wouldn't agree with that. interesting because many _ agree with that. interesting because many would - agree with that. interesting i because many would disagree with that. thank you for giving us your take on all of this. that aggressive move from the fed has gone down well
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on stock markets. it has been a very turbulent week. hong kong down by a%. on the us a bounce back from the main markets. the s&p 500 enter a bear market — falling 20 % from its peak. the nasdaq is up, it was down on monday. let's bring in sunaina sinha haldea — she is global head of private capital at us investment firm raymond james. let's talk about reaction on markets, in particular currency markets, in particular currency markets because the pound is looking pretty weak right now and callum sounding very positive give us your take? firstly, the stock market going up firstly, the stock market going up yesterday bond yields coming
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down, where signal the markets are finally thinking that the federal reserve the main central bank that powers the us economy is struggling to get a handle on the australian —— inflation story. flip to the uk and the pound sterling story is not in —— been a good one over the last few months, a degradation and belief in the uk economic growth story translating into the side of the pound, do something the decision today with the bank of england will keep in mind because they need to be able to have a signal to the markets including the currency markets on where the uk inflation story and economic growth story are going to see whether currency levels are. going to see whether currency levels are-— going to see whether currency levels are. what's your outlook then for the — levels are. what's your outlook then for the uk _ levels are. what's your outlook then for the uk given - levels are. what's your outlook then for the uk given the - then for the uk given the situation we are in at the moment, as callum said he looks at it and he is fairly positive the labour market is in a good place and yet markets are not so sure and you have the 0ecd
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report coming up last week saying next year we will be one of the worst performers? i have to be a little _ of the worst performers? i have to be a little bit _ of the worst performers? i have to be a little bit more _ to be a little bit more pessimistic on the u.k.'s overall picture, we are already at stagflation in the uk, actualised by higher inflation than anyone thought and low economic growth than anyone expected, so knowing we are already in a stagflation persistent high inflation environment in the uk really does on what the bank of england now chooses to do. and they are in a tough spot if they are in a tough spot if they decide to raise interest rates aggressively and go 50 basis points and signal to go even higher they will choke off growth and our growth is already expected to be one of the lowest in the developed world, so we are stuck between a rock and a hard place and as you pointed out labour market issues in the uk are much worse than many of our peer economies, it is not an easy
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situation to navigate out of and not one that will be resolved soon.- and not one that will be resolved soon. give us one final word _ resolved soon. give us one final word on _ resolved soon. give us one final word on financial- final word on financial markets, a very turbulent week as one would expect, so much going on, the federal reserve, the bank ofjapan, and we will talk about the european debt at the moment. to give viewers some insight into what's coming, what you think might be going on in weeks and months ahead for markets? tiara going on in weeks and months ahead for markets? two things, continued volatility, _ ahead for markets? two things, continued volatility, you - ahead for markets? two things, continued volatility, you will. continued volatility, you will continued volatility, you will continue to see bad news and good news, the bad news will be inflation will be quite high before it starts levelling off, and it will only come down at the back part of this year and beyond if you look at the charts most economists are staring at, all agility is very much in the picture. two, you are going to see a lot of risk assets being correlated, stocks and bonds over the last five months go up or down together,
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thatis months go up or down together, that is quite rare and only happens in a high inflation low growth environment, now we will see some decoupling of the two is markets start to stabilise in central bank start to take control of the inflation narrative. it's a buyer beware market because the volatility is not going anywhere.- is not going anywhere. let's now focus — is not going anywhere. let's now focus on _ is not going anywhere. let's now focus on europe. - is europe on the brink of a new debt crisis? on wednesday the european central bank called an emergency meeting, the first since the early days of the pandemic to address soaring borrowing costs faced by the likes of greece and italy on international bond markets. investors have been spooked by the high levels of debt taken on by southern european countries — and have been dumping their government bonds. carsten brzeski is global head of macro research at ing in frankfurt. good to speak to you, i don't know if you have been listening to all these conversations so
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far, talk us through the in europe? it far, talk us through the in europe?— europe? it is somewhat different. _ europe? it is somewhat different, as _ europe? it is somewhat different, as you - europe? it is somewhat different, as you said i europe? it is somewhat | different, as you said we europe? it is somewhat - different, as you said we have seen enormous pressure on europe debt markets over the last couple of days, it is already quite a sign the cbd gets together six days after a very important meeting, and what they announced as they will do something to tackle this widening of spread on bonds deals, because they are afraid this could be a return of the euro crisis, we are not there yet, let's be clear, bond yields aren't at the levels in 2010 and 2012, but the cbd are very concerned and this is why they are reacting now. the head ofthe they are reacting now. the head of the cbd _ they are reacting now. the head of the cbd was _ they are reacting now. the head of the cbd was in _ they are reacting now. the head of the cbd was in the _ they are reacting now. the head of the cbd was in the thick - they are reacting now. the head of the cbd was in the thick of i of the cbd was in the thick of the recent eurozone debt crisis and knows that only too well. if we look at these levels in europe, the cbd will be raising the cost of borrowing and
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that's anticipated which is why the bond market are behaving the bond market are behaving the way they are stop what impact would have the fact rates are so low, if not miners?— rates are so low, if not miners? ., , , . miners? that is the difference between 2010 _ miners? that is the difference between 2010 and _ miners? that is the difference between 2010 and 2012, - miners? that is the difference between 2010 and 2012, back| between 2010 and 2012, back then we had a recession and deflation, the cbd was dealing with very low monetary policy now we have stagnation and a possible recession but high inflation, the cbd needs to increase interest rates over the summer they will do this over the summer this is like standing with one put on the brakes of your car to bring up interest rates but pulling the accelerator because they have to do something to break down the bond yields, shows we should always look at the cbd to solve this issue of why we need bond yield spread but look at european governments who
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might have been a little bit too lazy over the last ten years, ordered to bring up more integration, to make the more eurozone more solid and resilience. if they had done so we would always look at the cbd is the land of last resort and saviour of the eurozone we would have a more integrated and more stable currency union and more stable currency union and we would have to be concerned about greater risk at all. ., ., ., ., all. you have to throw in the challenge — all. you have to throw in the challenge of _ all. you have to throw in the challenge of the _ all. you have to throw in the challenge of the war - all. you have to throw in the challenge of the war in - challenge of the war in ukraine, that impact is having, the way you just cannot predict what is going to be going on and the impact that will have on the eurozone economy, that is another problem, a huge factor? it is another problem, a huge factor? , , factor? it definitely is the central bank _ factor? it definitely is the central bank is _ factor? it definitely is the central bank is the - factor? it definitely is the central bank is the last i factor? it definitely is the central bank is the last to talk about uncertainty, couple of economists talking about uncertainty, the european economy zone economy is already in a de facto stagflation,
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stagnating growth, high inflation and doesn't look as things will improve any time soon. supply chain fractions coming out of the lockdown in shanghai, uncertainty from the war in ukraine, looking at high inflation in the second half of this year, so how does the central bank react, they should normalise monetary policy, they shouldn't be too loose but there is a clear risk and choke to tread very cautiously and at the same time make sure their monetary policy reaches all european countries in the same way. the cbd cannot tolerate higher interest rates. —— cbd. thank you, carsten brzeski.
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stay with us on bbc news. still to come: hold onto your hats — it's ladies day at royal ascot, the year's biggest showcase for the millinery trade. there was a bomb in the city centre. a code word known to be one used by the ira was given. army bomb experts were examining a suspect van when there was a huge explosion. the south african parliament has destroyed the foundation of apartheid by abolishing the population registration act which, for 40 years, forcibly classified each citizen according to race. just a day old and the royal baby is tonight sleeping in his cot at home. | early this evening, the new prince was taken by his mother and fatherl to their apartments . in kensington palace. germany's parliament, the bundestag, has voted by a narrow majority to move the seat of government from bonn to berlin. berliners celebrated into the night, but the decision was greeted with shock in bonn. the real focus of attention today was valentina tereshkova,
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the world's first woman cosmonaut. what do you think of - the russian woman in space? i think it's a wonderful achievement and i think we might be able to persuade the wife it would be a good idea, if i could, to get her to go up there for a little while. this is bbc world news. the latest headlines: the united states sends a further $1 billion worth of military aid to ukraine and reaffirms its commitment to stand by kyiv. police searching the amazon for two missing men say they've found human remains and made an arrest. let's go to asia now where disney's headache over the new lightyear animated movie continues. the film opens in singapore today where it has been given a 16 rating because of a scene where two female characters kiss. the controversy has seen the movie banned in parts of the middle east. now its release in china may be pulled. nick marsh is following
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the story in singapore. neck, it's morals all money? yes, pretty much. the scene we're talking about is very short one, one of buzz lightyear�*s female friends she has a kiss with her wife, it's not central to the plot but it's become central to the film's distribution worldwide in this part of the world, indonesia and malaysia, to make countries that have banned it. the big one if you talk in commercial terms is china. disney's producers say they have been asked by chinese film sensors to edit that scene. disney says they won't do that so it makes the film's release in china look very unlikely. we don't know exactly how much disney stands to lose in terms of revenue. i have seen estimates in the tens of millions of dollars, perhaps as much as $100 million. we will know how lucrative the chinese
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film marketers. last year the box office was worth billion, nearly $3 billion more than the us, they brought in for $.5 billion in 2021 also stop for this reason, you've seen in the past many plugs and companies making cuts to films, it doesn't look like disney will doesn't look like disney will do that, it's a stand we haven't seen before in the film industry. haven't seen before in the film indust . . ~ haven't seen before in the film indust . w' . ~ haven't seen before in the film indust . w ., ~ i. industry. 0k, neck, thank you. -- nick- _ the slump in digital currencies has continued, with bitcoin falling close to $20,000 on wednesday before recovering slightly. bitcoin is down around a third since friday. it has now lost 70% of its value since its record high back in november. the crash is being keenly felt in the central american nation of el salvador, which has poured millions of dollars into bitcoin and made it legal tender nine months ago, encouraging people to use it for day—to—day transactions. joe tidy reports. it's hard to get an appointment in el salvador post oak newly
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opened pat hospital. the reason, animals are given all the care they need forjust 25 cents. the only catch is that has to be paid for with bitcoin. the pat hospital is the latest idea from the government to get people to embrace bitcoin. it's been nine months since the country's cyrptocurrency loving president made bitcoin an official legal tender alongside the us dollar. many businesses now accept this digital currency that started on niche internet forums. the novelty has created an uptick in so—called bitcoin tourists and the idea is spreading. the central african republic has also made it bitcoin legal tender. for el salvador, bitcoin take—up is led by a highly marketed and heavily subsidised app called chivo.
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everyone in this poor central american country gets free bitcoin for signing up. this man sends money to his sister through the app, saving him and cross—border fees. but like many people we spoke to, he rarely uses bitcoin in chivo, preferring the stability of the digital dollar. surveys suggest usage of the app is waning and that salvadorans are confused about the new technology. there is a feeling that if people accept bitcoin, there is a worry about the volatility and the price of bitcoin goes up and down so fast, people are scared to accept it. the government has spent at least $200 million encouraging people to use bitcoin through chivo and the president has spent nearly $100 million buying bitcoin celebrating each purchase with a tweet, the coins have plummeted in value thanks to
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recent crypto crashes. the government says its confidence in its long—term plan. -- it is —— it is confident. the president is doubling down on bitcoin, planning to build a state—of—the—art city shrine to cryptocurrency. the project is months behind schedule and hasn't yet been paid for. joe tidy, bbc news, in el salvador. finally, hold onto your hats — it's ladies day at royal ascot. the prestigious horse racing meeting has become one of the year's biggest showcases for the hat industry. headgear is part of the ladies�* dress code, and for some, the more extravagant, the better.
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luxury hat makers have had a tough time during the pandemic, so is 2022 the year they make a comeback? beverley edmondson is a hat maker, otherwise known as a milliner, and speaks on behalf of the british hat guild. we are loving your gorgeous hat that you are wearing. good morning. is this the most important event of the year for the heart industry? absolutely. m dia the heart industry? absolutely. my diary is _ the heart industry? absolutely. my diary is so _ the heart industry? absolutely. my diary is so good _ the heart industry? absolutely. my diary is so good all- the heart industry? absolutely. my diary is so good all around | my diary is so good all around us this is the peak of our industry. in us this is the peak of our industry-— us this is the peak of our industry. us this is the peak of our indust . , ., ., �*, industry. in terms of how it's been impacted _ industry. in terms of how it's been impacted by _ industry. in terms of how it's been impacted by the - industry. in terms of how it's - been impacted by the pandemic, ascot wasn't taking place like so many other events. what did that mean for you? the pandemic was incredibly _ that mean for you? the pandemic was incredibly tough _ that mean for you? the pandemic was incredibly tough and - that mean for you? the pandemic was incredibly tough and annie i was incredibly tough and annie miller relies solely on events for our trade so without events, it was a very tough
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time. we are seeing a comeback. it's a huge comeback now and many, as we see in these photos, are loving ascot with the weather as well it is helpful. hasn't had any lasting impact on your industry, the pandemic is back i hope not. i pandemic is back i hope not. i know some milliners who have had to give up to find work elsewhere during the pandemic and hopefully in time there will be able to come back. but there have been some casualties in the pandemic. i’d there have been some casualties in the pandemic.— in the pandemic. i'd imagine it's not in the pandemic. i'd imagine it's rrot just _ in the pandemic. i'd imagine it's notjust the _ in the pandemic. i'd imagine it's not just the fact - in the pandemic. i'd imagine it's not just the fact that i it's not just the fact that royal ascot is back, as are many other events, but so many postponed weddings as well. for any events industry, it'sjust been a crazy year, hasn't it, for many?— been a crazy year, hasn't it, for many? absolutely. i can't remember— for many? absolutely. i can't remember a _ for many? absolutely. i can't remember a year _ for many? absolutely. i can't remember a year like - for many? absolutely. i can't remember a year like it. i for many? absolutely. i can't remember a year like it. thisj remember a year like it. this is always the big season for us when we aren't in a pandemic. this year we have got two years of postponed weddings and this
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year's weddings and the extra demand of people ready to go out and enjoy themselves, the horse racing events like ascot. in terms of challenges, are you affected by supply chain issues like with materials or has that unaffected the heart industry? of course, moving stuff from of course, moving stuff from country to country, supply chains, yes, there have been issues. 0ther remit it isn't very bad, we've done well with planning but some things are taking a lot longer to arrive than they should have and sometimes you have to go, 0k, what can i do instead? as milliners, it's ourjob to be creative. milliners, it's our “0b to be warmth milliners, it's our “0b to be reativefi milliners, it's our “0b to be creative. �* , ., , creative. briefly, what is the most expensive _ creative. briefly, what is the most expensive had - creative. briefly, what is the most expensive had you i creative. briefly, what is the i most expensive had you made it? it was one should be going to ascot this year, and that was £750. ., ,., i: ascot this year, and that was £750. ., i: , £750. not bad, £750 sounds treat. i £750. not bad, £750 sounds great. i don't _ £750. not bad, £750 sounds great. i don't know - £750. not bad, £750 sounds great. i don't know if - £750. not bad, £750 sounds
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great. i don't know if you i £750. not bad, £750 sounds] great. i don't know if you are going to ascot but i imagine you aren't getting much sleep so i appreciate you getting up early. thanks to being on the programme and thank you for your company. have a good day and i'll see you soon. well, we're certainly turning up the heat over the next couple of days. for southern parts of the uk, this is going to be a short—lived heatwave. and this is the peak — by friday, london and the south—east up to around 33, perhaps even 3a degrees. look at the average — so we're significantly higher compared to what we would normally see this time of the year. not unprecedented — the record is actually a little above 35 degrees. so we're not beating any records, but it's not that far away if you think about it. now, this is what's happening on the satellite picture. here's the heat coming in from the south. we've got cooler air in the north atlantic. that cooler air will eventually win. i think by the time we get to saturday into sunday, things will start cooling off and storms will come our way as well, but not
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in the short term. this is what it looks like thursday morning — clear skies across england and wales, a bit more cloud in the north—west here with these atlantic weather systems just brushing the north—west of the british isles, and bits and pieces of rain. some of the showers could turn a little heavy in the western isles, perhaps the north of northern ireland through the day. there's another weather front heading our way, but that's to come thursday night. but look at the temperatures — 28 in london, widely mid—20s into yorkshire, for example. we could actually hit 30 degrees on thursday. now, here's a reminder of the pollen levels — if you've been struggling with your nose and itchy eyes, the pollen levels are very high. and also, it's worth mentioning the uv levels — we are approaching the longest day of the year, the sun's high in the sky. you know, make sure you're very careful if you're out for any lengthy period of time in that sunshine. so, here's a look at the weather for friday. this is actually going to be the peak of the heat, so these south—south—westerly winds draw up that hot air from the south, 33 or 3a degrees, all the hot air coming in from france. the north—west of the country,
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much fresher here — this is that cooler atlantic air already starting to spread in. 17 degrees in glasgow. and this is what happens during the course of saturday — so that cooler atlantic air wrapping around this low pressure spreads across the country, here's the cold front. the heat is pushed to the south, back into france, and we get into this area of storminess. so, come the weekend, whether you like it or not, after a hot and sunny friday, it's all going to go "bang".
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good morning, welcome to breakfast with naga munchetty and charlie stayt. 0ur headlines today. a man confesses to killing a britishjournalist and his local guide in brazil, and leads police to where he buried the bodies. the prime minister's ethics advisor, lord geidt, resigns a day after saying there was a "legitimate question" over whether borisjohnson broke ministerial rules. a stark warning that the number of ambulances queuing at hospitals in england is leading to a dangerous increase in 999 response times. he was on his own. and he knew he was on his — he was on his own. and he knew he was on his own. _ he was on his own. and he knew he
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was on his own. i _ he was on his own. and he knew he was on his own. i do _ he was on his own. and he knew he was on his own. i do must - he was on his own. and he knew he was on his own. i do must have i he was on his own. and he knew he was on his own. i do must have felt| was on his own. i do must have felt abandoned, — was on his own. i do must have felt abandoned, you

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