Cornering the market
Encyclopedia
In finance
, to corner the market is to get sufficient control of a particular stock
, commodity
, or other asset
to allow the price to be manipulated
. Another definition: "To have the greatest market share
in a particular industry without having a monopoly
. Companies that have cornered their markets usually have greater leeway in their decisions; for example, they may charge higher prices for their products without fear of losing too much business. Large companies, such as Wal-Mart
or Microsoft
, are considered to have cornered their markets." http://financial-dictionary.thefreedictionary.com/Cornering+the+Market
In either case, the cornerer hopes to gain control of enough of the supply
of the commodity to be able to set the price for it.
This can be done through several mechanisms. The most direct strategy is to simply buy up a large percentage of the available commodity offered for sale in some spot market
and hoard
it. With the advent of futures trading, a cornerer may buy a large number of futures contract
s on a commodity and then sell them at a profit after inflating the price.
Although there have been many attempts to corner markets by massive purchases in everything from tin
to cattle
, to date very few of these attempts have ever succeeded; instead, most of these attempted corners have tended to break themselves spontaneously. Indeed, as long ago as 1923, Edwin Lefèvre
wrote, "very few of the great corners were profitable to the engineers of them." A cornerer can become vulnerable due to the size of the position
, especially if the attempt becomes widely known. If the rest of the market senses weakness, it may resist any attempt to artificially drive the market any further by actively taking opposing positions. If the price starts to move against the cornerer, any attempt by the cornerer to sell would likely cause the price to drop substantially. In such a situation, many other parties could profit from the cornerer's need to unwind the position.
More success in cornering the market has come by gaining a near-monopoly share in industries such as computers (like IBM
) and software (like Microsoft
).
in The Politics (Book I Section 1259a), Thales of Miletus once cornered the market in olive-oil presses:
started accumulating shares of the Harlem Railroad in 1862 because he anticipated its strategic value. He took control of the Harlem Railroad and later explained that he wanted to show that he could take this railroad, which was generally considered worthless, and make it valuable. The corner of June 25, 1863 can be seen as just an episode in a strategic investment that served the public well.
financial panic in the United States was caused by the efforts of Jay Gould
and James Fisk
to corner the gold market on the New York Gold Exchange
. It was one of several scandals that rocked the presidency of Ulysses S. Grant
. When the government gold hit the market, the premium plummeted within minutes and many investors were ruined. Fisk and Gould escaped significant financial harm.
on May 9, 1901, is a well documented case of competitive buying, resulting in a panic. The 2009 Annotated Edition of Reminiscences of a Stock Operator
contains Lefèvre's original account in chapter 3 as well as modern annotations explaining the actual locations and personalities on the page margins.
, the March 1920 corner of The Stutz Motor Company
is an example of a manipulated corner ruining everyone involved, especially its originator Thomas Fortune Ryan
.
onion
farmer
s alleged that Sam Seigel and Vincent Kosuga
, Chicago Mercantile Exchange
traders, were attempting to corner the market on onions. Their complaints resulted in the passage of the Onion Futures Act
, which banned trading in onion futures in the United States and remains in effect .
and William Herbert Hunt attempted to corner the world silver
markets in the late 1970s and early 1980s, at one stage holding the rights to more than half of the world's deliverable silver. During the Hunts' accumulation of the precious metal, silver prices rose from $11 an ounce in September 1979 to nearly $50 an ounce in January 1980. Silver prices ultimately collapsed to below $11 an ounce two months later, much of the fall occurring on a single day now known as Silver Thursday
, due to changes made to exchange rules regarding the purchase of commodities on margin.
Yasuo Hamanaka
, Sumitomo Corporation
's chief copper trader, attempted to corner the international copper market over a ten year period leading up to 1996. At one point during this "Sumitomo copper affair
," Hamanaka is believed to have controlled approximately 5% of the world copper market. As his scheme collapsed, Sumitomo was left with large positions in the copper market, ultimately losing US$2.6 billion. In 1997 Hamanaka pleaded guilty to criminal charges stemming from his trading activity and was sentenced to an eight year prison sentence.
cornered the market in shares of Volkswagen
, which briefly saw Volkswagen become the world's most valuable company. Porsche claimed that its actions were intended to gain control of Volkswagen rather than to manipulate the market: in this case, while cornering the market in Volkswagen shares, Porsche contracted with naked shorts—enabling it to perform a short squeeze on them. It was ultimately unsuccessful, leading to the resignation of Porsche's chief executive and financial director and to the merger of Porsche into Volkswagen.
One of the wealthiest men in Germany's industry committed suicide after shorting Volkswagen shares.
purchased 240,100 tonnes of cocoa. The buyout caused cocoa prices to rise to their highest level since 1977. The purchase was valued at £658 million and accounted for 7 per cent of annual global cocoa production. The transaction, the largest single cocoa trade in 14 years, was carried out by Armajaro Holdings, a hedge fund co-founded by Mr Anthony Ward. Ward, the manager of the hedge fund, has been dubbed "Chocfinger" by fellow traders for his exploits. The nickname is a reference to both the Bond villain Goldfinger
as well as a British confection.
This example demonstrates that 7 per cent of a perishable good is enough to allow profit taking via cornering a market.
.
While Cramer points out frankly that this is a corner (calling into question the proper working of the free market
), official sources avoid calling this situation a corner. For example, the U.S. Department of Energy explained it would release million barrels of oil from the Strategic Petroleum Reserve and called this
.
Since this corner is not yet over, it has to be evaluated later if this is a global corner showing how a corner can harm the public interest.
futures plays a key role in the 1983 movie Trading Places
. The two protagonists (played by Eddie Murphy
and Dan Aykroyd
) eventually foil their rivals' plan by short-selling the futures
, causing hundreds of millions of dollars in losses for the latter.
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, to corner the market is to get sufficient control of a particular stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
, commodity
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
, or other asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
to allow the price to be manipulated
Market manipulation
Market manipulation describes a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a security, commodity or currency...
. Another definition: "To have the greatest market share
Market share
Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...
in a particular industry without having a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
. Companies that have cornered their markets usually have greater leeway in their decisions; for example, they may charge higher prices for their products without fear of losing too much business. Large companies, such as Wal-Mart
Wal-Mart
Wal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...
or Microsoft
Microsoft
Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...
, are considered to have cornered their markets." http://financial-dictionary.thefreedictionary.com/Cornering+the+Market
In either case, the cornerer hopes to gain control of enough of the supply
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
of the commodity to be able to set the price for it.
This can be done through several mechanisms. The most direct strategy is to simply buy up a large percentage of the available commodity offered for sale in some spot market
Spot market
The spot market or cash market is a public financial market, in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market in which delivery is due at a later date...
and hoard
Hoarding
Hoarding or caching is a general term for a behavior that leads people or animals to accumulate food or other items in anticipation of future need or scarcity.-Animal behavior:...
it. With the advent of futures trading, a cornerer may buy a large number of futures contract
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
s on a commodity and then sell them at a profit after inflating the price.
Although there have been many attempts to corner markets by massive purchases in everything from tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
to cattle
Cattle
Cattle are the most common type of large domesticated ungulates. They are a prominent modern member of the subfamily Bovinae, are the most widespread species of the genus Bos, and are most commonly classified collectively as Bos primigenius...
, to date very few of these attempts have ever succeeded; instead, most of these attempted corners have tended to break themselves spontaneously. Indeed, as long ago as 1923, Edwin Lefèvre
Edwin Lefèvre
Edwin Lefèvre was an American journalist, writer, and statesman most noted for his writings on Wall Street business.Lefèvre was born George Edwin Henry Lefèvre on 23 January 1871 in Colón, Colombia , the son of Henry Lefèvre , who was for many years the general agent of the Pacific Steamship...
wrote, "very few of the great corners were profitable to the engineers of them." A cornerer can become vulnerable due to the size of the position
Position (finance)
In financial trading, a position is a binding commitment to buy or sell a given amount of financial instruments, such as securities, currencies or commodities, for a given price....
, especially if the attempt becomes widely known. If the rest of the market senses weakness, it may resist any attempt to artificially drive the market any further by actively taking opposing positions. If the price starts to move against the cornerer, any attempt by the cornerer to sell would likely cause the price to drop substantially. In such a situation, many other parties could profit from the cornerer's need to unwind the position.
More success in cornering the market has come by gaining a near-monopoly share in industries such as computers (like IBM
IBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...
) and software (like Microsoft
Microsoft
Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...
).
ca 6th Century BCE: Thales of Miletus
According to AristotleAristotle
Aristotle was a Greek philosopher and polymath, a student of Plato and teacher of Alexander the Great. His writings cover many subjects, including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology...
in The Politics (Book I Section 1259a), Thales of Miletus once cornered the market in olive-oil presses:
Thales, so the story goes, because of his poverty was taunted with the uselessness of philosophy; but from his knowledge of astronomy he had observed while it was still winter that there was going to be a large crop of olives, so he raised a small sum of money and paid round deposits for the whole of the olive-presses in Miletus and Chios, which he hired at a low rent as nobody was running him up; and when the season arrived, there was a sudden demand for a number of presses at the same time, and by letting them out on what terms he liked he realized a large sum of money, so proving that it is easy for philosophers to be rich if they choose.
19th century: Classic examples by Edwin Lefèvre
Journalist Edwin Lefèvre lists several examples of corners from the mid-19th century. He distinguishes corners as the result of manipulations from corners as the result of competitive buying.Cornelius Vanderbilt and the Harlem Railroad
One of the few cornerers whose rationale was published and justified, Cornelius VanderbiltCornelius Vanderbilt
Cornelius Vanderbilt , also known by the sobriquet Commodore, was an American entrepreneur who built his wealth in shipping and railroads. He was also the patriarch of the Vanderbilt family and one of the richest Americans in history...
started accumulating shares of the Harlem Railroad in 1862 because he anticipated its strategic value. He took control of the Harlem Railroad and later explained that he wanted to show that he could take this railroad, which was generally considered worthless, and make it valuable. The corner of June 25, 1863 can be seen as just an episode in a strategic investment that served the public well.
James Fisk, Jay Gould and the Black Friday (1869)
The 1869 Black FridayBlack Friday (1869)
Black Friday, September 24, 1869 also known as the Fisk/Gould scandal, was a financial panic in the United States caused by two speculators’ efforts to corner the gold market on the New York Gold Exchange. It was one of several scandals that rocked the presidency of Ulysses S. Grant...
financial panic in the United States was caused by the efforts of Jay Gould
Jay Gould
Jason "Jay" Gould was a leading American railroad developer and speculator. He has long been vilified as an archetypal robber baron, whose successes made him the ninth richest American in history. Condé Nast Portfolio ranked Gould as the 8th worst American CEO of all time...
and James Fisk
James Fisk (financier)
James Fisk, Jr. —known variously as "Big Jim," "Diamond Jim," and "Jubilee Jim"—was an American stock broker and corporate executive.-Early life and career:...
to corner the gold market on the New York Gold Exchange
New York Gold Exchange
The New York Gold Exchange was an exchange formed near the beginning of the Civil War for the purpose of creating an open market for transactions involving gold and the government-created paper currency, the greenback...
. It was one of several scandals that rocked the presidency of Ulysses S. Grant
Ulysses S. Grant
Ulysses S. Grant was the 18th President of the United States as well as military commander during the Civil War and post-war Reconstruction periods. Under Grant's command, the Union Army defeated the Confederate military and ended the Confederate States of America...
. When the government gold hit the market, the premium plummeted within minutes and many investors were ruined. Fisk and Gould escaped significant financial harm.
Lefèvre thoughts on corners of the old days
In chapter 19 of his book, Edwin Lefèvre tries to summarize the rationale for the corners of the 19th century.20th century: The Northern Pacific Railway
The corner of The Northern Pacific RailwayNorthern Pacific Railway
The Northern Pacific Railway was a railway that operated in the west along the Canadian border of the United States. Construction began in 1870 and the main line opened all the way from the Great Lakes to the Pacific when former president Ulysses S. Grant drove in the final "golden spike" in...
on May 9, 1901, is a well documented case of competitive buying, resulting in a panic. The 2009 Annotated Edition of Reminiscences of a Stock Operator
Reminiscences of a Stock Operator
Reminiscences of a Stock Operator is a 1923 novel by American author Edwin Lefèvre which is the thinly disguised biography of Jesse Lauriston Livermore...
contains Lefèvre's original account in chapter 3 as well as modern annotations explaining the actual locations and personalities on the page margins.
1920s: The Stutz Motor Company
Called "a forerunner of the Livermore and Cutten operations of a few years later" by historian Robert SobelRobert Sobel
Robert Sobel was an American professor of history at Hofstra University, and a well-known and prolific writer of business histories.- Biography :...
, the March 1920 corner of The Stutz Motor Company
Stutz Motor Company
The Stutz Motor Company was a producer of luxury cars based in Indianapolis, Indiana, USA. Production began in 1911 and continued through 1935. The marque reappeared in 1968 under the aegis of Stutz Motor Car of America, Inc., and with a newly defined modern retro-look. Although the company is...
is an example of a manipulated corner ruining everyone involved, especially its originator Thomas Fortune Ryan
Thomas Fortune Ryan
Thomas Fortune Ryan was a U.S. tobacco and transport magnate. Part of his fortune paid for the construction of the Cathedral of the Sacred Heart in Richmond, Virginia.-Early days:...
.
1950s: The onion market
In the late 1950s, United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
onion
Onion
The onion , also known as the bulb onion, common onion and garden onion, is the most widely cultivated species of the genus Allium. The genus Allium also contains a number of other species variously referred to as onions and cultivated for food, such as the Japanese bunching onion The onion...
farmer
Farmer
A farmer is a person engaged in agriculture, who raises living organisms for food or raw materials, generally including livestock husbandry and growing crops, such as produce and grain...
s alleged that Sam Seigel and Vincent Kosuga
Vincent Kosuga
Vincent Kosuga was an American onion farmer and commodity trader best known for manipulating the onion futures market. Though he made millions of dollars on commodity trading, his actions were highly controversial and attracted government scrutiny...
, Chicago Mercantile Exchange
Chicago Mercantile Exchange
The Chicago Mercantile Exchange is an American financial and commodity derivative exchange based in Chicago. The CME was founded in 1898 as the Chicago Butter and Egg Board. Originally, the exchange was a non-profit organization...
traders, were attempting to corner the market on onions. Their complaints resulted in the passage of the Onion Futures Act
Onion Futures Act
The Onion Futures Act is a United States law banning the trading of futures contracts on onions. In 1955 two onion traders, Sam Seigel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August...
, which banned trading in onion futures in the United States and remains in effect .
1970s: The Hunt brothers and the silver market
Brothers Nelson Bunker HuntNelson Bunker Hunt
Nelson Bunker Hunt is an American oil company executive. He is best known as a former billionaire whose fortune collapsed after he and his brother William Herbert Hunt tried but failed to corner the world market in silver. He is also a successful thoroughbred horse breeder.-Personal:Hunt was born...
and William Herbert Hunt attempted to corner the world silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
markets in the late 1970s and early 1980s, at one stage holding the rights to more than half of the world's deliverable silver. During the Hunts' accumulation of the precious metal, silver prices rose from $11 an ounce in September 1979 to nearly $50 an ounce in January 1980. Silver prices ultimately collapsed to below $11 an ounce two months later, much of the fall occurring on a single day now known as Silver Thursday
Silver Thursday
Silver Thursday was an event that occurred in the silver commodity markets on Thursday, 27 March 1980. A steep fall in silver prices led to panic on commodity and futures exchanges.-Background:...
, due to changes made to exchange rules regarding the purchase of commodities on margin.
1990s: Hamanaka and the copper market
Rogue traderRogue trader
A rogue trader is an authorised employee making unauthorised trades on behalf of their employer. It is most often applicable to financial trading, and as such is a term used to describe persons - professional traders - making unapproved financial transactions....
Yasuo Hamanaka
Yasuo Hamanaka
is a man who formerly was the chief copper trader at Sumitomo Corporation, one of the largest trading companies in Japan, and was also known as "Mr. Copper" because of his aggressive trading style and "Mr...
, Sumitomo Corporation
Sumitomo Corporation
Sumitomo Corporation is one of the largest worldwide trading company , and is a diversified corporation. Sumitomo is headquartered in the Harumi Island Triton Square Office Tower Y in Chūō, Tokyo, Japan...
's chief copper trader, attempted to corner the international copper market over a ten year period leading up to 1996. At one point during this "Sumitomo copper affair
Sumitomo copper affair
The Sumitomo copper affair refers to a metal trading scandal in 1995 involving Yasuo Hamanaka, the chief copper trader of the Japanese trading house Sumitomo Corporation...
," Hamanaka is believed to have controlled approximately 5% of the world copper market. As his scheme collapsed, Sumitomo was left with large positions in the copper market, ultimately losing US$2.6 billion. In 1997 Hamanaka pleaded guilty to criminal charges stemming from his trading activity and was sentenced to an eight year prison sentence.
2008: Porsche and shares in Volkswagen
During the financial crisis of 2007-2010 PorschePorsche
Porsche Automobil Holding SE, usually shortened to Porsche SE a Societas Europaea or European Public Company, is a German based holding company with investments in the automotive industry....
cornered the market in shares of Volkswagen
Volkswagen
Volkswagen is a German automobile manufacturer and is the original and biggest-selling marque of the Volkswagen Group, which now also owns the Audi, Bentley, Bugatti, Lamborghini, SEAT, and Škoda marques and the truck manufacturer Scania.Volkswagen means "people's car" in German, where it is...
, which briefly saw Volkswagen become the world's most valuable company. Porsche claimed that its actions were intended to gain control of Volkswagen rather than to manipulate the market: in this case, while cornering the market in Volkswagen shares, Porsche contracted with naked shorts—enabling it to perform a short squeeze on them. It was ultimately unsuccessful, leading to the resignation of Porsche's chief executive and financial director and to the merger of Porsche into Volkswagen.
One of the wealthiest men in Germany's industry committed suicide after shorting Volkswagen shares.
2010: Armajaro and the European cocoa market
On July 17, 2010, ArmajaroArmajaro
Armajaro is an investment firm based in London. The company specialises within the cocoa and coffee markets, managing investments in soft commodity and equity hedge funds...
purchased 240,100 tonnes of cocoa. The buyout caused cocoa prices to rise to their highest level since 1977. The purchase was valued at £658 million and accounted for 7 per cent of annual global cocoa production. The transaction, the largest single cocoa trade in 14 years, was carried out by Armajaro Holdings, a hedge fund co-founded by Mr Anthony Ward. Ward, the manager of the hedge fund, has been dubbed "Chocfinger" by fellow traders for his exploits. The nickname is a reference to both the Bond villain Goldfinger
Auric Goldfinger
Auric Goldfinger is a fictional character and the main antagonist in the James Bond film and novel Goldfinger. His first name, Auric, is an adjective meaning of gold...
as well as a British confection.
This example demonstrates that 7 per cent of a perishable good is enough to allow profit taking via cornering a market.
2011: Oil and hedge funds
All of the above examples had effects that were limited to niche markets. This opens up the question about the possibility of cornering one of the markets for strategic commodities that are fundamental to all economies around the world. In Summer 2011 Jim Cramer drew the public's attention to a corner of the oil marketPetroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
.
the cartel of nonconsumers who are using oil futures as part of an investing strategy that includes endless attempts to corner the market for crudes in order to make fortunes for them. that's what they did in 2008 when they cornered it and took it to $147. we know the futures markets are thin for oil. almost all the execs on the show confirm to me these futures are unreliable and easily manipulated. the price can be the benchmark for real commerce, meaning they can make a lot of money so long as no one seeks to bust the cartel price.
While Cramer points out frankly that this is a corner (calling into question the proper working of the free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
), official sources avoid calling this situation a corner. For example, the U.S. Department of Energy explained it would release million barrels of oil from the Strategic Petroleum Reserve and called this
a warning shot to speculators in the oil market
.
Since this corner is not yet over, it has to be evaluated later if this is a global corner showing how a corner can harm the public interest.
Fictional examples
An attempt to corner the market on orange juiceOrange juice
Orange juice is a popular beverage made from oranges. It is made by extraction from the fresh fruit, by desiccation and subsequent reconstitution of dried juice, or by concentration of the juice and the subsequent addition of water to the concentrate...
futures plays a key role in the 1983 movie Trading Places
Trading Places
Trading Places is a 1983 American comedy film, of the satire genre, directed by John Landis, starring Dan Aykroyd and Eddie Murphy. It tells the story of an upper class commodities broker and a homeless street hustler whose lives cross paths when they are unknowingly made part of an elaborate bet...
. The two protagonists (played by Eddie Murphy
Eddie Murphy
Edward Regan "Eddie" Murphy is an American stand-up comedian, actor, writer, singer, director, and musician....
and Dan Aykroyd
Dan Aykroyd
Daniel Edward "Dan" Aykroyd, CM is a Canadian comedian, actor, screenwriter, musician, winemaker and ufologist. He was an original cast member of Saturday Night Live, an originator of The Blues Brothers and Ghostbusters and has had a long career as a film actor and screenwriter.-Early...
) eventually foil their rivals' plan by short-selling the futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
, causing hundreds of millions of dollars in losses for the latter.