# Nvidia Scandal, Data Center Backlash, and AI Market Volatility

**Podcast:** Prof G Markets
**Published:** 2026-11-10

## Transcript

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If money is evil, then that building is hell.
Welcome to Prof G Markets.
I'm Ed Elson.
It is November 10th.
Let's check in on yesterday's market vitals.
The S&P 500 and the Dow rallied more than 2% and the Nasdaq rallied 3%, shaking off last week's brutal sell-off.
Chipmakers climbed despite a significant drop in Nvidia shares.
More on that in a second.
Meanwhile, Brent crude fell to $92 per barrel.
And finally, the yield on 10-year treasuries was stable ahead of the next inflation report out this morning.
OK, what else is happening?
Nvidia CEO Jensen Huang has admitted to having an affair and US officials believe the woman involved is a Chinese spy.
The woman, Alice Huang, no relation to Jensen, was a senior executive at Singapore-based Megaspeed International.
Megaspeed is a cloud compute provider and NVIDIA's biggest customer in Southeast Asia.
U.S.
officials believe she was recruited by a Chinese spy agency to collect information on Jensen Huang.
In a letter to employees on Sunday, Jensen wrote, quote, I was unfaithful to my wife.
My actions hurt her and our children.
There is no excuse for what I did.
Now, NVIDIA's board has launched an independent investigation, and lawmakers have requested a closed-door briefing with Huang on the company's security protocols and his interactions with Alice.
NVIDIA shares fell as much as 8% and then closed down 4%.
Joining us to discuss all of this, we're speaking with Ashley Gold, Semaphore's senior tech policy reporter based in Washington, D.C.
Ashley, thank you for joining us.
So this has just been an absolute bomb.
There's so much we could get into.
I guess it would be helpful to understand the facts of this case, whatever it may be.
And maybe we should start with Alice Huang.
Who is this person?
What do we know about her?
To what extent is she actually a Chinese asset?
So she's being accused of being a Chinese asset.
The Chinese embassy in Washington has denied that.
She was a TV reporter in China before she became an executive.
And there's photographs of she and Jensen together over the years at various conferences and whatnot.
The Chinese side of things has denied that she's a spy, but U.S.
intelligence, you know, assessed that she was.
I know that I read in the Times stories that there's been many, many attacks.
attempts to reach her over the course of their reporting, and she has not responded to any of those inquiries.
So a lot of questions are revolving around her, way more questions than answers.
And I think the main question that people in Washington have is, was she able to glean anything out of Jensen over the course of their relationship that she then fed back to China?
What sort of trade secrets or information about NVIDIA chips was she able to actually pass back?
to China.
And that's what's missing in the reporting so far, whether she was successful in what is alleged to have been her mission.
Yeah, just looking at this company, Megaspeed, it was one of NVIDIA's biggest customers, bought nearly $5 billion in chips in 2024.
And it sounds like the idea is that they have been passing those chips on to Chinese companies.
I mean, there are...
sort of two elements here.
One is the fact that he's had this affair, and you can think whatever you want about that.
I don't think it necessarily says anything about NVIDIA as a company.
But the problem seems to be, did he leak secrets?
Did he work with this Chinese spy in some way?
Was he aware of any of this?
Was there any, I guess, foul play by Jensen Huang?
And I guess the question is, will...
Nvidia be punished for that?
What do you know, based on what's happening in Washington, about any actions or steps that the government might take to, I don't know, crack down on Nvidia?
A couple of things are happening.
Congress just came back today from the midterm elections, so they have a lot of work to do.
They've got a lot of things on the list.
But after this story exploded over the weekend, it sort of shot to the top of the list of their priorities and of people they want to investigate, people that they want to come up to the Hill for closed-door briefings or potentially in-person briefings or testimony that is open to the public.
There was a gang of...
meeting today, which is the, you know, top members on national security on both the House and Senate side.
And I know that this story came up.
I spoke to some members coming out of that meeting who said they were very concerned about some of the things they had heard, but that investigation still had to be done before they were.
you know, going to come to any conclusive decisions about what needed to happen as far as holding Jensen accountable.
What Congress can do now is strengthen export controls.
So there's a number of bills that have made it into the Senate National Defense Authorization Act, which is one of those bills that has to pass every year.
So a lot of riders, they call them, a lot of bills hitch a ride on this bill.
So currently there's I think there's three export control bills in the Senate version of the NDAA.
It hasn't been clear whether the House would also support having those bills in the NDAA.
Leader Jeffrey said today that he supports it, but keep in mind, he does not take over until January.
So it's not clear that that would happen in the lame duck, but perhaps early next year.
There's China Hawks on the Republican side and the Democratic side.
And Jensen has been in Trump's ear and other Trump officials ear, sort of denying the need for stricter export controls or for Capitol Hill to have a role in deciding how export controls are managed.
But I think that this incident is going to make that bipartisan interest and strengthen export controls a lot louder.
And we could see some action there by the end.
the year, and if not, by early next year.
It's interesting because Trump was supposedly briefed on this in 2025, specifically this relationship between Jensen Huang and Alice Huang, who at the time was presumed to be a spy.
Like, this is only kind of getting out now, but Trump knew about it and he chose to not do anything with this information.
So the only difference now is, like, we now know the information.
Or I guess...
Congress knows the information too.
So do you expect that anything, that any action will be taken?
Because I'm looking at the stock price just getting hammered right now.
It seems as though Wall Street believes that something's going to change.
Maybe they're not going to be able to sell chips to China anymore.
Maybe Jensen Huang is out as CEO, and maybe that's another conversation we should have.
But do you think that realistically something will actually be done on the legislative front that will really significantly disrupt NVIDIA's business?
I do think export controls are going to be strengthened.
I just don't know whether it's going to happen before the end of the year or...
maybe later into the future when the Democrats are actually in charge on Capitol Hill.
As far as from the administration, Trump is not someone who is easily scandalized, especially over allegations of cheating or things like that.
You know, he and his colleagues in his circle have dealt with their fair share of scandal as well.
So it's not so much the cheating scandal that's the problem.
The question is, is Jensen Wong still able to be trusted as the head of this company that is important to so much of the economy when this lapse in judgment led to this much scrutiny?
Ultimately, that's something his board has to decide.
It's not Capitol Hill's job to fire him as CEO.
That's up to the board, which is doing an investigation.
I do think the playbook of sort of cozying up to Trump as a tech executive and getting your way, this is like going to chip away at that, especially as the Democrats take control.
It's not going to be like it was where you could cut a check for the ballroom, where you could be a donor to MAGA or other Trump-affiliated PACs and hope that, you know, regulation goes your way.
I think there's going to be a lot more scrutiny on tech companies' dealings with the administration.
I mean, one thing that was really interesting that I'd like to get your reaction to, we were just looking back at a very interesting moment in an interview that he did with Dworkesh Patel, where he was very normal, calm.
This was, I think, almost a year ago.
And then suddenly the topic of China comes up, and you see him get very, very defensive, very flustered.
I just want to play you this clip.
Actually, this is from April, where you kind of see him react to the question, and it seems to strike a nerve.
It feels like you're making two different statements.
One is that we're going to win this competition with Huawei because our chips are going to be way better if we're allowed to compete.
And another is that they would be doing the same exact thing without us anyways.
Right?
How can those two things be at the same time?
It's obviously true.
In the absence of a better choice, you'll take the only choice you have.
How is that illogical?
It's so logical.
The reason they want NVIDIA chips is they're better.
Better is more compute.
More compute means you can train a better model.
It's better because it's easier to program.
We have a better ecosystem.
Whatever the better is.
Whatever the better is.
For someone who is so calm and confident most of the time, that moment really stood out.
And looking back on it now, it almost makes me think that...
he knew that there was something nefarious going on, specifically in terms of relationship with China.
Maybe he actually knew that this woman that he was having this affair with was in cahoots with, I guess, the CCP.
I mean, what does that tell us about what's happening here?
What it tells us is that, you know, we obviously don't know if he knew that he was having an affair with a spy.
He could have been taken by surprise like everyone has.
What we do know is that his on-the-record statements made many times, not just in that podcast interview you played, he has been...
pro-doing business with China, pro-selling chips to China.
He's sort of stood alone in that among other tech executives in Washington, AI companies in Washington who have wanted to strengthen and limit export control so that American chips can't flow to China the way that they do, the way that Jensen has been able to convince this administration to allow sales of the H200 chips.
So when you look back at everything he's said about that in the past year or so, it's like, why?
You know, do you genuinely believe that it is better for American competition that the Chinese have access to some of your chips because then they're reliant on your chips and they're not developing their own?
Is that your true held belief about the way American versus China competition works?
Or is something else at play?
And I think if he had a relationship with this woman who turned out to be a spy, I don't know how you look at his statements and say, well, he's just not a China Hawk and that's what he believes about the way, you know, global business works.
So the fact that you sort of can't separate that anymore is the problem.
He's going to appear before the House committees on November 18th.
They want him to.
I don't know if he'll show up.
Yeah.
OK.
OK.
Well, that's important, too.
Just as we wrap here.
your predictions for what's next, especially this question of does he stay?
That seems to be the thing that Wall Street is most anxious about.
It's really hard to say.
I think if it was up to Congress, he would go.
I think if it's up to his board, who have a fiduciary duty to Nvidia shareholders, he stays.
I think Washington and Wall Street are going to have very different priorities here.
Ashley Gold is Semaphore's senior tech policy reporter based in Washington.
Ashley, appreciate your time.
Thank you.
After the break.
We break down the tech sell-off.
And for even more markets insights, you can subscribe to my weekly newsletter.
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We're back with Prof G Markets.
Investors can't seem to make up their mind about the election results.
After an initial post-election rally, the S&P 500 then suffered its worst trading session since Liberation Day, ending down more than 4% on Thursday.
Every sector in the index fell.
The Nasdaq lost $2.3 trillion in market value, a single-day record, and big tech had its worst day since the COVID sell-off.
All in all, American markets ended last week significantly lower than where they were before the midterms, with the tech industry leading the losses.
Yesterday, however, markets rallied yet again, with the S&P climbing 2.5%, and the NASDAQ rallying 3%.
So what exactly are investors betting on?
Here to break this down, we're speaking with Robert Armstrong, US financial commentator for the Financial Times and author of the unhedged newsletter.
Good to see you.
So a lot to get into.
We'll get to Jensen Huang and his extramarital affairs in a moment, I think.
But, you know, what we're seeing in the markets seems to be a lot of panic and a lot of confusion.
Last week seemed like maybe this was the moment.
Maybe the AI trade officially unwinds.
Last Thursday was scary.
Yeah.
But now it seems maybe not.
I mean, what do you think?
What are investors, what are the markets telling us?
We are still laboring under, all of us, the single great uncertainty, which is what is the return on investment, on these immense investments being made in AI?
This involves the most important companies in the market.
Nobody really knows the answer.
And anybody who does tell you they know the answer is trying to sell you something.
So, as we've said, I think we've talked about together before, if the revenue and profit eventually appears, all the stuff we're worrying about now and the circular financing and the anxiety and the valuations and, you know, Jensen Wang's love affairs and everything else will slip into memory and we will be okay.
If, on the other hand, the money doesn't appear, nothing will save us.
right?
But we don't have the information and it is very normal for a market operating under a very large uncertainty like that to vacillate like the one we are living in right now.
That's point number one.
Point number two, as I've said a tiresomely infinite number of times on your show, the longer term trend on the market is sideways.
We're stalled since May, right?
And so again, But like you'd expect, we don't know what's going on.
We're kind of frozen in place.
Deer in the headlights.
There is, there has been some moves in the market towards diversification.
That's a good sign.
Some sectors have moved up that are far from AI.
People are hedging their bets, but we don't know what's going on.
And until we do know what's going on, this is the world we live in.
What was that sell-off last week?
Because it seemed to be a reaction to the election.
My takeaway is, We had essentially a referendum on data centers.
Americans said, we don't like them.
A lot of these data center proposals lost.
And I think a lot of investors are thinking, oh, so the data center construction build out is going to come to a screeching halt.
It's going to fall off a cliff.
We've got a governor in Texas who wants to pause data centers.
And Texas is where we were going to build all of these data centers.
And so that's our problem.
Sell like crazy.
But then this week they say, actually, maybe not.
Maybe we overdid it.
I mean, is that what's happening?
Or is it something more fundamental that was maybe pre-existing?
The answer to both of your questions is yes.
So starting with your last question, is there something fundamental pre-existing?
Yes.
Risk appetite in markets has gone down.
You can see that in, as we may have discussed before, you can see that.
in investors moving back to the safety of treasury somewhat over the last month since about the beginning of October.
So in the background running, we have a change in risk appetite.
That's point number one.
Point number two, I think you're quite right about those local results.
You know, it was at 40, there were 47 local ballot initiatives about data centers.
The data centers lost 46 of them.
People do not feel good about this technology.
Rightly or wrongly or in between, the people have spoken, right?
Right now, we're frightened about this technology.
We don't want it in our neighborhood.
That is an issue.
But this is one of the interesting things about markets in general, Ed, is that we are taught back in finance school that markets instantly assimilate.
all the available information into a set of prices that captures everything all at once.
But in reality, markets act a lot like people, meaning it takes them a long time to digest all this stuff.
And last week, we just got such an enormous amount of news that it's like you're going through step by step, digesting different pieces of mood.
And it took people a day to be like, at first they're like, yay, we have an answer.
Right.
Whatever the answer is, we're not contesting it.
It's not uncertain.
It's Democrats, it's Republicans, it's done.
The uncertainty has disappeared.
Hooray.
And then you can sort of see the market starting to go through the details and be like, well, shit, life ain't so simple.
So for this to take days and weeks is normal market behavior, whatever they may have taught you back in school.
Well, this...
probably segues us quite well into what's happened with Jensen Huang, because this is another example of we've just been dumped a whole load of news that isn't totally clear what it even means or what the implications actually are.
Like, oh, he was having an affair, like, okay, like, that's not good of him.
But also, the woman he was having an affair with is allegedly an intelligence asset of China.
Did he know about it?
Did he not?
I mean, all of these questions.
And yet the markets have reacted.
They've gone, oh, bad sign, sell.
And we've seen hundreds of billions of dollars in market value erased in a matter of hours.
I mean, what do you make of the market's reaction to that?
What actually are the implications?
Or are we just kind of in sort of panic mode?
One thing we know for certain is that Jensen Wang, who is an immensely important person to the AI economy, and two, one of the three or four largest companies in the world, I don't know where it ranks as of today, but it's in that race there, has committed an act of bad judgment that will go into the bad judgment hall of fame for all time.
Do you know what I mean?
This is a politically sensitive business.
It straddles an incredibly important geopolitical line, which is the line between the United States and China.
And his affair went over that line in the sense that the person he was having an affair with is a Chinese national.
And what's more, a Chinese national in the advanced semiconductor business, which means they would be having every reason.
to be having discussions of technical details, right?
And then you get to the allegation that she's an asset of a foreign power.
And it's like, I want to ask you a question, Ed, right now.
How many employees of any company in the world, from CEO on down, would have survived this disclosure even to this point in time?
Let's count them.
So like clearly the CEOs of most companies would have been fired instantly.
Right.
Uh, yes.
You know, so who could survive?
Like maybe Mark Zuckerberg could survive something like this.
Maybe Saul Maltman, maybe Dario Amadei, maybe Yenson Wang could survive something like this, but like other than maybe less than five or six guys in the world, you're fired already.
Right.
Okay.
And that's precisely the problem.
The question I'm asking myself is, because he knows he's one of those guys, is he more likely to make this astonishingly stupid mistake?
Like, does being an—you know, I'm saying this in slightly humorous ways, but this is a serious question.
Like, the culture of the imperial CEO, might it make that CEO less trustworthy?
I think, in addition— the imperial CEO who has been handsomely rewarded for sweet-talking the president on the phone every other week.
And so if you, I mean, this is part of the problem with the Trump culture of cronyism, which is that, I mean, if you give these individuals these huge amounts of power where decisions are made not based on some institutional or deliberative...
committee or any sort of semblance of an actual system.
It's basically just like, who gives me a call?
Who do I like?
Who's a good guy?
Then suddenly rules start to go out of the window and maybe you don't have to worry about these things.
But I do agree.
It's like if he was going to have an affair with anyone, did it have to be the Chinese spy with the giant cloud compute company in Southeast Asia?
Was that really the right decision?
It's just agonizing to think about it.
And on the corporate side, It's like, was it, you know, does Nvidia have a successor?
What was their hit by a bus plan with this guy?
And if you've got an as important a guy as Mr.
Wang walking around the world, you better have a hit by the bus plan.
And if the answer is we were going to wing it, that's a terrible indictment of the governance structure of that company.
Right.
And, uh, I just feel like this is another example of one of Armstrong's truisms.
which is when things are going well, corporate governance does not matter.
And then all of a sudden, boy, oh boy, does it matter, right?
And now NVIDIA is having that moment.
So you're the board or you're the whoever and you're the shareholders of NVIDIA.
By the way, NVIDIA very nicely does not have a dual class shareholder structure like some of these other Silicon Valley monstrosities.
So, you know, it really is owned by the shareholders, which is how companies should operate in my view, right?
So something can happen now, but what do you do?
It's everybody's saying how flat a company it is.
The guy has 60 direct reports or whatever.
Everything runs through him.
You can't just wreck the company by disappearing him, right?
Because that's a real problem.
This is a very important company.
We need it to keep working.
But if he stays, it looks like we've appointed these four or five people at these four or five big tech companies as gods who can just bestride the earth and can do whatever they want.
So I don't know what you do here.
I think the whole thing's a disaster, to be quite honest.
He's completely compromised any faith and trust that he may or may not have earned over the past several years.
Certainly, he's not credible.
Yeah, and I think he did earn it.
That's the thing.
He's done an incredible thing with this.
He's obviously an incredible CEO.
Look at what he's achieved.
100%.
The credibility on export policy.
is officially out the window.
And that seemed to be one of his big things, is advocating for, no, there's a reason we should have a relationship with China.
It's like, oh yeah, that makes sense now.
Just moving on to what comes next.
You, I mean, you wrote in your newsletter following this sell-off coming out of the election.
I mean, you asked this question, like, is this the big one?
Capital B, capital O.
Is this the moment where this bubble that we all thought was gonna...
eventually come crashing down.
Is this that?
Is this the AI bubble popping?
Is this an implosion that a lot of people have been expecting?
You said you don't give a flat answer, but you say that you will be, quote, looking for four things in the weeks to come.
You said, are there signs of investor capitulation outside of tech stocks?
You said, are there any signs of emerging macroeconomic weakness that could reinforce the troubles in the equity market?
Does the confidence of the leading companies in AI crack?
Despite persistent inflation and sound macroeconomic data, do bond yields take another major leg down from here, foreshadowing a slowdown?
Let's talk more about what you're looking for in terms of determining whether this sell-off is the big one or if it's something a little more minor.
Okay, one thing that's really good, and I think that really saved our bacon, was that strong employment report on Friday morning.
and it was a very strong report we're clearly in an employment recovery in the country and it's pretty broad we're not just an economy that's being held up by by ai that matters right and so you know i wish the wage growth numbers the real wage growth numbers were better but we are close to full employment and while the macroeconomic picture is as solid as it is I feel like the equity market can keep going.
Of course, the equity market can sink the macroeconomic picture.
The direction of causality runs in both directions.
That said, if we start to see cracks in the macro backdrop, the stock market looks a lot more tenuous.
So that's point number one.
Two, it's still going to be pretty rough if one of the hyperscalers comes out one of these days and says, you know what?
Maybe we're going to spend a little less on these data centers.
Maybe it wasn't as good idea as we thought.
That is going to be an awful moment.
And that could be the thing that pops the bubble.
And I'm sure, by the way, those companies are acutely aware of that.
So they'll be watching their words very carefully.
But expressions of loss in confidence in their own capital expenditure plans would be very dangerous.
And, you know, the bond market, as always, is...
the big scary animal we all have to worry about.
It's been coming down as investors have been coming, you know, there's been some flight to safety and the idea, you know, the, the stock market being a little wobbly actually tightens financial conditions means maybe the fed won't have to do it.
So some of that is being reflected in, in bonds coming down.
But if bonds rear up again, we're in scarier territory.
If all that stuff keeps happening.
Solid macro.
The key companies keep expressing confidence and backing that up with dollars.
The bond market behaves itself.
I feel like this is not the big one.
But, you know, those are the three I would emphasize right off the top of my head.
Final question.
Does Jensen Huang stay or go?
What do you think happens?
If I, you know, we have a lot of information left to discover.
You know, it's the classic who knew what when.
And it could easily go either way.
You know, if you force me to take a bet, I guess I would bet this is impossible to come back from for him.
But maybe there's some elegant solution where they make him chair and bring in a CEO.
So like his wherewithal and knowledge and expertise stays within the company, but they bring some outsider in.
Because he has betrayed.
our trust so greatly.
He can't be left as the solo pilot of this plane.
I just feel like given what we know now, that's probably the outcome.
But again, I want to give a lot of provisos to that.
There's a lot of information still to come out.
There could be important exonerating or damning facts to come out.
But right now, this is a very difficult situation for NVIDIA and for him.
remaining as the CEO.
Robert Armstrong is U.S.
financial commentator for the Financial Times and author of the Unhedged newsletter.
Rob, always appreciate your time.
Thanks for having me.
This was great.
Okay, as we end this episode, a quick word on data centers, or more specifically, the backlash we have been seeing against data centers.
As we discussed...
On yesterday's episode, the midterms turned out to be something of a referendum on data centers.
More than 40 data center proposals were voted on across the country, and only one of them passed.
Meanwhile, 56% of voters said that AI and data centers were a crucial or major factor in their decision in this election.
And many of the candidates who put data centers front and center in their campaigns won those campaigns by significant margins.
In other words, Americans didn't just say no to Trump at the midterms.
They also said no to data centers.
And not only that, it was an unequivocal and resounding no.
Now, this is, of course, why AI stocks tanked last week.
Names like AMD, Micron, NVIDIA, SpaceX, essentially any company whose business model depends on building data centers, all of them got...
crushed.
And the reason is that investors believe that data center construction is about to come to a screeching halt.
The fewer data centers that get built, the fewer chips that get sold, the less compute it's consumed, and so on and so forth.
The political problem appears to be the straw that broke the AI build-outs back.
Unsurprisingly, this has prompted some very fierce debate.
Some say that the backlash is warranted.
After all, data centers have thus far increased electric prices in local communities, as well as utility bills, and that's certainly not good.
But others say that the backlash is ridiculous, because at the same time, we also know that data centers create jobs, not in huge numbers, I know, but still, they do create jobs, and more importantly, they generate enormous amounts of tax revenue.
Data centers in Loudoun County, Virginia, for example, fund nearly 40% of the local government budget.
That is a big deal, and it's a decent argument for why data centers might actually be good for a local community.
But I also think that this whole debate is actually besides the point.
Because the truth about data centers is that this is the first time in American history that regular people have held leverage over Silicon Valley.
And that is very important.
Because over the past several decades, the American people have been completely and utterly powerless to big tech.
They've been powerless to their monopolization, powerless to regulatory capture, powerless to privacy abuses, powerless to addictive algorithms and to their influence over our children, powerless to their unprecedented level of societal control.
And most importantly, they have also been powerless to big tech's abuse of that power.
Despite the many harms that big tech has been responsible for, no one in America has ever been able to do anything about it.
They bought our politics.
They bribed our leaders.
They skirted around the law.
And not once have the American people been given a say in all of this.
Not once have they been afforded the opportunity to tell Silicon Valley, no.
That is until now.
Because now, big tech's mission...
happens to converge with an unusually stringent legal procedure known as land use regulation.
And the reality is, if they want to do what they want to do, they now have to ask Americans for permission.
And last week, the American people's answer was plain and simple.
The answer was no.
This is a dramatic shift in societal power.
This is a dynamic that Silicon Valley has actually never experienced before.
They got too comfortable in the Wild West of digital services where regulation was scant and where permission didn't really exist.
But now they're operating in the physical world where laws have stood the test of time and where democratic consensus actually happens to matter.
And now big tech is learning an age-old lesson, commonly known as karma.
And that is if you piss enough people off, eventually...
they will get round to returning the favor.
That is what is happening today.
You can call it petty.
You can call it misguided.
You can call it whatever you want.
But the reality is that this is how humans work.
And big tech is about to find out why.
Okay, that's it for today.
This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer.
Our video editor is Brad Williams.
Our research team is Dan Chalon, Kristen O'Donoghue, and Mia Silverio.
And our social producer is Jake McPherson.
Thank you for listening to Prof G Markets from Prof G Media.
If you liked what you heard, give us a follow.
I'm Ed Elson.
I will see you tomorrow.
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