Showing papers on "Commodity market published in 2015"

Does Futures Speculation Destabilize Commodity Markets

Abstract: This paper examines how increased speculator participation in the commodity futures market affects market outcomes, including trades' price impacts, price volatility, and market quality. Contrary to the popular belief that speculators are responsible for the recent commodity price fluctuation, my analysis finds no evidence that speculators destabilize the commodity spot market. Instead, speculators contribute to lower price volatility, enhanced price efficiency, and better liquidity in the commodity markets. More importantly, I show that speculators either have no effect or stabilize prices during periods of large price movement. My findings suggest speculators have had a significant and in fact positive influence on the commodity market during the recent “financialization” period, implying that restricting speculative trading in the futures market is not an efficient way to stabilize the commodity market. © 2015 Wiley Periodicals, Inc. Jrl Fut Mark 35:696–714, 2015

Market interdependence among commodity prices based on information transmission on the Internet

Abstract: Human behaviour on the Internet has become a synchro-projection of real society. In this paper, we introduce the public concern derived from query volumes on the Web to empirically analyse the influence of information on commodity markets (e.g., crude oil, heating oil, corn and gold) using multivariate GARCH models based on dynamic conditional correlations. The analysis found that the changes of public concern on the Internet can well depict the changes of market prices, as the former has significant Granger causality effects on market prices. The findings indicate that the information of external shocks to commodity markets could be transmitted quickly, and commodity markets easily absorb the public concern of the information-sensitive traders. Finally, the conditional correlation among commodity prices varies dramatically over time.

Time Varying Correlation Between Islamic Equity and Commodity Returns: Implications for Portfolio Diversification

Abstract: This paper aims at investigating the time varying relationship between Islamic equity and commodity returns in order to examine how combination of Islamic equities and commodities contribute to the benefits of portfolio investors and managers. In order to investigate this relationship, we employed multivariate GARCH method on return series of five different commodity groups (energy, precious metals, agricultural, non-ferrous metals and softs group), Dow Jones spot commodity index as a proxy of an aggregate commodity market and Dow Jones Islamic index over the period January 3, 2001 - March 28, 2013. Our findings show that correlations between commodity and Islamic stock markets’ returns change in different time periods and these two markets moved very closely during 2008 financial crisis in particular. Besides, volatility of returns in both markets reached at their peaks during the 2008 crisis period. We also show that despite sharing some common features, commodities cannot be considered as a homogeneous asset class: a speculation phenomenon is for instance, highlighted for energy sector comprising oil, while the safe-haven role of gold is evidenced, which constitutes a part of precious metal sector.

Commodity Variance Risk Premia and Expected Futures Returns: Evidence from the Crude Oil Market

Abstract: We develop an extended mean-variance model to investigate the relationship between variance risk premia (VRP) and expected futures returns in the commodity market. In the presence of stochastic variance, commodity producers trade both futures and options to hedge their exposure to commodity price and volatility risk; speculators provide liquidity and ask for risk premia. This model reveals a negative relationship between VRP and expected futures returns. Empirically, we measure VRP using options and high-frequency futures data in the crude oil market. Consistent with our model, we find that VRP negatively predict futures returns even after controlling for other predictor variables.

Empirical microeconomics action functionals

Abstract: A statistical generalization of microeconomics has been made in Baaquie (2013), where the market price of every traded commodity, at each instant of time, is considered to be an independent random variable . The dynamics of commodity market prices is modeled by an action functional –and the focus of this paper is to empirically determine the action functionals for different commodities. The correlation functions of the model are defined using a Feynman path integral. The model is calibrated using the unequal time correlation of the market commodity prices as well as their cubic and quartic moments using a perturbation expansion. The consistency of the perturbation expansion is verified by a numerical evaluation of the path integral. Nine commodities drawn from the energy, metal and grain sectors are studied and their market behavior is described by the model to an accuracy of over 90% using only six parameters. The paper empirically establishes the existence of the action functional for commodity prices that was postulated to exist in Baaquie (2013).

Speculation, Risk Aversion, and Risk Premiums in the Crude Oil Market

Abstract: Speculative activity in commodity markets has increased dramatically over the last decade. I investigate whether aggregate risk aversion and risk premiums in the crude oil market co-vary with the level of speculation. Using crude oil futures and option data, I estimate aggregate risk aversion in the crude oil market and find that it is significantly lower after 2002, when speculative activity started to increase. Risk premiums implied by the state-dependent risk aversion estimates are negatively correlated with speculative activity, and are on average lower and more volatile after 2002. These findings, together with the increased index fund infusion in the commodity market since 2002, suggest that index-fund investors who demand commodity futures for the purpose of portfolio diversification are willing to accept lower compensation for their positions. Estimated state-dependent risk premiums have substantial predictive power for subsequent futures returns and outperform commonly used predictors.

Commodity market risk from 1995 to 2013: an extreme value theory approach

Abstract: In this article we examine whether extreme risk has increased in the agricultural commodity market during the period 1995–2013. We add to the literature on food price volatility by analysing the tail segment of futures price return distributions. Food price variability is a concern for governments and regulators worldwide, as most nations trade in food. High food price variability can contribute to poverty and malnourishment, in particular for people in less economically developed economies. We find no indications of systematically increasing tail-risk for the commodities in our sample. Analysis of estimated shape-parameters of the Generalized Extreme Value distribution further supports the conclusion that there is no general systematic change in the extreme risk associated with these commodity investments.

Commodity markets outlook : understanding El Nino

Abstract: Ample supplies and weak demand, especially for industrial commodities, contributed to the continued slide in most commodity prices in the third quarter of 2015. Annual price forecasts are revised down for 2015 and 2016. Only a modest recovery is expected in 2016. This issue briefly analyzes the implications of the ongoing El Nino episode and the recent nuclear agreement with Iran for agricultural and energy markets, respectively. Although El Nino can be the strongest on record, its impact is likely to be predominantly local rather than global because world commodity markets are currently well-supplied and spillovers from local markets to global prices are typically weak. Following Iran’s nuclear agreement, the country’s 40 million barrels in floating storage can be made available almost immediately upon sanctions being lifted; and, within a few months, Iran can increase its crude oil production toward pre-sanctions levels. The impact of Iranian exports on global oil and natural gas markets can be large over the longer term provided that Iran attracts the necessary foreign investment and technology to extract its substantial reserves.

Financialization of the Commodities Markets: A Non-technical Introduction

Abstract: The goal of the first part of this chapter is threefold: (a) to introduce the term structure of forward/futures commodity prices, the contango/backwardation duality and the notion of rolling yield as it pertains to trading through commodity indexes; (b) to use principal component analysis and the computation of equity and commodity “betas” to provide empirical evidence of the dramatic changes which occurred in the mid-2000s; (c) finally, to review the major arguments which have been put forth in the debate over the financialization of these markets. While conspicuously absent from some of the English language dictionaries, the word financialization has been widely used to describe the increasing role of institutional investors in the commodity markets. Using econometric data analyses for the purpose of illustration, we concentrate on futures price data from the post-2004 period during which the commodity markets experienced a significant influx of new financial investors. As far as we know, mathematical models attempting to reproduce or illustrate (let alone explain) the empirical observations at the core of the debate are few and far between. As a result, our approach remains mostly descriptive of the data which have been used to back up the claims of the various sides of the argument. The originality of our contribution, if any, is the discussion of a new generation of roll yield maximizing commodity indexes, the empirical analysis of the term structure of open interest, and the possible connections between the two.

Analysis of Selected Seasonality Effects in the Following Metal Markets: Gold, Silver, Platinum, Palladium and Copper

Abstract: The commodity market has been becoming one of the main popular segments of the financial markets among individual and institutional investors in recent years. Likely to the equity market, the problem of anomalies in the commodities market is becoming an interesting phenomenon, especially in the segment of the precious metal. This paper tests the hypothesis of monthly, the day-of-the week and weekend effects of the precious metal markets quoted on the London Metal Exchange for gold, silver, platinum and copper in the period of 01.01.1994-31.12.2014 considering also palladium in the period 01.01.1997-31.12.2014. Calculations presented in this paper indicate the absence of the monthly effect on gold, silver, platinum, copper markets but proved occurrence of monthly anomaly in the month of September on palladium market. In the analyzed period day-of-the week effect for any of the studied metal markets was not observed but the weekend effect was registered on the gold and copper markets.

The Development and Challenges of China’s Futures Markets

Abstract: The futures market in China started in the early 1990s as the economic reform deepened. After two decades of development, there are now four futures exchanges: Shanghai Futures Exchange, Dalian Commodity Exchange, Zhengzhou Commodity Exchange, and China Financial Futures Exchange. Product innovations and regulatory changes largely contribute to the rapid expansion of the market. Several futures contracts are now among the most active contracts in the world market. With development of its futures market and efforts to open up the market to investors overseas, China’s pricing power in the global commodity market has improved over time.

Analysis of the nonlinear relationship between commodity prices in the last two decades

Abstract: We propose the construction of a network to study the correlation among price indices of different commodities, by using the Multifractal Cross-Correlation method proposed by Podobnik and Stanley. This estimator, based on the method Multifractal Detrended Fluctuation Analysis, is effective for self-similar signals with characteristics such as those we here analyze. We construct different networks for time periods between 1991 and 2012. Each node represents a commodity group and the links are the cross-correlation between nodes. We study the evolution of these networks from January 1991 to April 2012. The results show that after 2007, high connectivity arises between the nodes of the matrix. We conjecture that this is a consequence of the cash flow from equities and real estate markets to the commodity market due to the subprime mortage crisis.

Hoard Behavior and Commodity Bubbles

Abstract: Hoarding by households is often associated with commodity market panics and bubbles. Using US supermarket scanner data on household purchases during the 2008 Global Rice Crisis, we provide an estimate of household hoarding when export bans led to a spike in prices worldwide in the first half of 2008. We distinguish unwarranted hoarding from rational precautionary demand by comparing the timing of purchases with the expectations implied by futures markets for US rice. Even as futures traders expected little risk of shortages in early May, households significantly increased their purchases from April to June. Some of this increase came from households with no previous purchases or demonstrable taste for rice. We then estimate the effect of hoarding on prices by documenting mean reversion in growth rates of prices in counties with large amounts of hoarding.

Commodity Futures Market in India: Development, Regulation and Current Scenario

Abstract: India, being an agro-based economy, has markets for most of the agro-based commodities. India is the largest consumer of gold in the world, which implies a huge market for the yellow metal. India has huge spot markets for all these commodities. For instance, .Indore has a huge market for soya, Ahmedabad for castor seeds and Surendranagar for cotton, etc. Commodity futures trading in India is almost as old as that in the united states with India’s first organized futures market. Bombay Cotton Trade Association, being set up 1875. Futures market in bullion was inevitable and began to emerge in Mumbai in 1920. And there are three major electronic commodity exchanges for the commodity trading in India, they are: National Multi-Commodity Exchange Limited (NMCE), Multi Commodity Exchange of India Limited (MCX) and The National Commodity and Derivatives Exchange Limited (NCDEX). The main purpose of this study current scenario of commodity futures market in India. The commodity market provides trading to trade commodities of varied types. This study evaluates the extent to which commodity policies and regulatory framework. With the current pace of growth, India would emerge as a major player in the international market in terms of commodity consumption, production and trade. After gaining the considerable popularity, the major commodity exchanges in India has started the futures contract in various commodities year back, which can serve preferably to manage the risk that can arises due to adversity of expected prices of commodities besides the price discovery tool. The future contracts dealing in major commodity exchanges are standardize in nature. In this paper examine the commodity futures market in India, taking into consideration the history of commodity futures market. And after that I have discussed the mechanism of trading, segments and regulatory framework of commodity market in India. Secondary data collected from books, journals, magazines websites of Forward Market Commission (FMC) and national level commodity exchanges in India. I have at the end given the research conclusion.

Malaysian crude palm oil market volatility: a GARCH approach

Abstract: This study aims to examine the volatility of Malaysian Crude Palm Oil (CPO) market for it has important implication to both business communities and policy makers. This study adopted the GARCH (1,1) model and the result of the finding exhibited persistent volatility as well as volatility clustering in Malaysian CPO market. The persistent volatility implies that the percentage of market volatility is closer to unity. This reflects the frequency of occurrence of the CPO market volatility while volatility clustering provides useful information on the broadness of the shock. Adequate understanding of the degree of volatility of the market can instigate informed decision by policy makers which may perhaps mitigate persistency of uncertainty of returns. Business communities on the other hand will be consistently alert on the voice of the market and ready to make sound decision on the events of the market. At the same time, the importance of hedging in Malaysian CPO futures market is empirically confirmed. This study contributes to the understanding on commodity market volatility by quantifying the half-life of decay of the shock in the market.

Analysis of Selected Seasonality Effects in Market of Barley, Canola, Rough Rice, Soybean Oil and Soybean Meal Future Contracts

Abstract: (ProQuest: ... denotes formulae omitted.)IntroductionAccording to Efficient Market Hypothesis (EMH), introduced by Fama [1970], the security prices fully reflect all available information. This theory has been subjected to many analysis and has become a main source of disagreement between academics and practitioners. The problem of the financial markets effi- ciency, especially of equity markets, has become a main topic of number of scientific works, which has led to a sizable set of publications examining this issue. In many empirical work dedicated to the time series analysis of rates of return and stock prices, statistically significant effects of both types were found, i.e. calendar effects and effects associated with the size of companies. These effects are called "anomalies", because their existence testifies against market efficiency. Discussion of the most common anomalies in the capital markets can be found, among others, in Simson [1988] or Latif et al. [2011].One of the most common calendar anomalies observed on the financial markets are:I. Day-of-the-week effect - different distributions of expected rates of return can be observed for different days of the week [Keim and Stambaugh 1984]. On the Polish market, findings regarding the day-of-the-week effect were conducted among others by: Buczek [2005, pp. 51-55] and Szyszka [2007, pp.141-146].II. Monthly effect - achieving by portfolio replicating the specified stock index, different returns in each month. For the first time, this effect was observed by Keim [1983], who noted that the average rate of return on stocks with small capitalisation is the highest in January.III. Other seasonal effects - in the financial literature, the following calendar effects can be found:1. The weekend effect - Cross [1973] found that markets tend to raise on Fridays and fall on Mondays. His findings generated a flood of research [Lakonishok and Levi 1982; Jaffe and Westerfield 1985; Condoyanni et al. 1987; Connolly 1991; Abraham and Ikenberry 1994].2. The holiday effects - markets before holidays or other trading breaks tend to rise.3. Within-the-month effect - positive rates of returns only occur in the first half of the month [Ariel 1987; Kim and Park 1994].4. Turn-of-the month effect - average rate of return calculated for the last day of the month and for three days of the next month, was higher than the average rate of return calculated for the month, for which the rate of return of only one session, was taken.Commodity market is one of the segments of the financial market, characterised by high heterogeneity of assets compared to the stock or bond markets [Johnson and Soenen 1997]. It is often perceived as a separate asset class, which in turn leads to low correlation of commodity market rates of return in comparison to the returns on the stock or bonds markets. The consequence of this fact is the possibility of constructing more diversified investment portfolio compared to a portfolio solely consisting of shares or bonds.In the world literature, in contrast to the stock market, relatively little attention has been dedicated to the occurrence of the seasonality effects on the agricultural commodity market. This fact was one of the reasons encouraging the author to undertake empirical studies.The aim of this article is to examine the prevalence of selected seasonality effects on the markets of: barley, canola, rough rice, soybean oil and soybean meal future contracts. The prices of barley and canola futures contracts, quoted on the Canadian ICE Futures Exchange are expressed in Canadian dollars and the contract unit is equal to 20 tons. The prices of soybean oil futures, soybean meal futures and rough rice futures are quoted on Chicago Mercantile Exchange in USD dollars and the contract unit is defined as: 60 000 lbs (~ 27 metric tons), 100 short tons (~ 91 metric tons) and 2 000 hundredweight (CWT) (~ 91 metric tons), respectively. …

Wider economic impacts of accessibility: a literature survey

Abstract: This paper starts out with by discussing the definitions of Wider Economic Impacts/Benefits and regional development. Each area where WEIs could be present is then treated: economic growth (production and cost function studies), labour market (agglomeration, labour supply), commodity market and housing market. A theoretical background is given, the empirics are summarized and the relation to CBA is discussed.

Cross-Market Investor Sentiment in Commodity Exchange-Traded Funds

Abstract: This study shows how the investor sentiment in the stock market affects prices of commodity exchange-traded funds (ETFs). The study provides quantitative evidence that the tracking errors of commodity ETFs differ in the bullish versus the bearish stock market, and the aggregate tracking error of commodity ETFs is sensitive to the well-known sentiment measures. The study exploits a profitable trading strategy based on investor sentiment in the stock market and commodity market. The sentiment-driven demand for commodity ETFs could exist even after consideration of trading costs, and it is a short-term phenomenon. This unique evidence indicates investor sentiment affects asset valuation across markets.

Cross-Market Investor Sentiment in Commodity Exchange-Traded Funds

Abstract: /Zusammenfassung This study shows how the investor sentiment in the stock market affects prices of commodity exchange-traded funds (ETFs). The study provides quantitative evidence that the tracking errors of commodity ETFs differ in the bullish versus the bearish stock market, and the aggregate tracking error of commodity ETFs is sensitive to the well-known sentiment measures. The study exploits a profitable trading strategy based on investor sentiment in the stock market and commodity market. The sentiment-driven demand for commodity ETFs could exist even after consideration of trading costs, and it is a short-term phenomenon. This unique evidence indicates investor sentiment affects asset valuation across markets. Anleger-Sentiment bei Rohstoff-Exchange-Traded-Funds auf verschiedenen Markten Diese Studie zeigt, wie sich Sentiment-Faktoren am Aktienmarkt auf die Preise von Rohstoff-Exchange-Traded-Funds (ETFs) auswirken. Die Studie liefert quantitative Evidenz dafur, dass die Tracking Errors von ...

Analysis of Selected Seasonality Effects in the Following Agricultural Markets: Corn, Wheat, Coffee, Cocoa, Sugar, Cotton and Soybeans

Abstract: The commodity market has been becoming one of the main popular segments of the financial markets among individual and institutional investors in recent years, due to downward trend on the stock exchanges. Likely to the equity market, the problem of anomalies in the commodities market is becoming an interesting phenomenon, particularly in the segment of the agricultural market. This paper tests the hypothesis of monthly, the day-of-the week and weekend effects of seven agricultural commodities quoted in the period of 01.01.1994-31.12.2014. Calculations presented in this paper indicate the absence of the monthly effect on coffee market and the existence of monthly effect in the case of another six analyzed agricultural commodities: corn, wheat, sugar, cocoa, cotton and soybeans. In the analyzed period, no occurrence of day-of-the-week effect was proven for corn, cotton and soybeans. The day-of-the-week effect was registered on the markets of: wheat, coffee, sugar and cocoa and the weekend effect was observed only on the cocoa market.

Financial crisis and global market couplings

Abstract: The global financial crisis occurred in 2007 and its severe damaging consequences on other global financial markets, show the great importance of understanding the impact and contagion between different financial markets. A variety of methods have been proposed and implemented on market contagion. However, most of the existing literature simply test the existence of market contagion in financial crisis, and there is limited work go deep to investigate the complex market couplings which are the essence of market contagion. This is indeed very difficult as it involves the selection of discriminative indicators, the different types of couplings (intra-market coupling, inter-market coupling), the hidden characteristic of couplings, and the evaluation of market couplings in understanding crisis. To address these issues, this paper proposes a CHMM-LR framework to investigate the relations between financial crisis and three pairwise market couplings from three typical global financial markets: Equity market, Commodity market and Interest market. We adopt Coupled Hidden Markov Model (CHMM) to capture the complex hidden pairwise market couplings, and the financial crisis forecasting abilities based on different pairwise market couplings are imported to measure the relations by Logistic Regression (LR). Experiments of real financial data during the period 1990 to 2010 show the advantages of market couplings in understanding crisis. In addition, the experimental results provide crucial interpretation for the 2008 global financial crisis periods identification.

Analysis of Selected Seasonality Effects in Market of Rubber Future Contracts Quoted on Tokyo Commodity Exchange

Abstract: The commodity market has been becoming one of the main popular segments of the financial markets among individual and institutional investors in recent years, due to downward trend on the stock exchanges. Likely to the equity market, the problem of anomalies in the commodities market is becoming an interesting phenomenon, particularly in the segment of the agricultural market. This paper tests the hypothesis of: monthly, daily, the day-of-the week, the first and the second half of monthly effects on the market of rubber futures, quoted in the period from 01.12.1981 to 31.03.2015. Calculations presented in this paper indicate the existence of monthly effect: in May and November, with the use of the average monthly rates of return and in February, March, April, June, July, August, October and December, when the daily average rates of return were implemented. The seasonal effects were also observed in the case of testing the statistical hypothesis for daily averaged rates of returns for different days of the month (15th), as well as for the daily average rates of return on various days of the week (Thursday). The seasonal effects were no registered for the daily average rates of return in the first and in the second half of a month.

On the economic sources of commodity market volatility

Abstract: We analyze the effect of macroeconomic and financial uncertainty on the volatility of the aggregate commodity market and of major commodity groups. We find that inflation uncertainty bears some predictive power for commodity market volatility. Moreover, financial variables associated with credit risk and equity market stress are important determinants of commodity market volatility especially after the financialization of commodity markets. Finally, we document for the first time that the equity variance risk premium is a particularly strong predictor of commodity futures volatility.

Exploring the nexus between futures contracts and spot returns in the Indian commodity market

Abstract: The purpose of this paper is to explore the nexus between spot returns and futures contracts for crude oil, gold and study whether future trading volume react faster to news and help to predict spot returns. We examine the effect in the Indian context using data from the multi commodity exchange (MCX) of India from January 2005 until May 2012. The vector autoregressive model (VAR), Granger causality Wald test, variance decomposition and impulse response function are applied to the data collected. The results exhibited that for both crude oil and gold, the future trading volume is influenced by its own past than the past spot returns. Further, bidirectional causality runs from gold spot returns to gold futures trading volume. Contrarily, we do not have sufficient evidence to support that crude futures trading volume aid in the forecast of crude spot returns in India. Overall, the finding implies that gold futures trading volume react faster to information and help to predict the gold spot returns than crude oil in the Indian commodity markets.

Three Narratives on the Changing Face of Global Commodities Market Structure

Abstract: /Zusammenfassung The commodity market structure has changed at an incredible pace in the last 20 years and is now subject to intense scrutiny by academics and policy-makers. Taking a long-term view of price formation, empirical findings show that international trade and finance, mostly driven by emerging markets demand, market liberalisations and technological developments in market infrastructure, have increased pro-cyclicality and interconnection among physical commodity markets. Price formation mechanisms are more sensitive to information flows. The interconnection with the financial system is strong and so the transmission of shocks from the financial system to commodity physical and futures markets. The rise of commodity-linked financial transactions was an important contribution to those developments. WTO commitments in international trade and expansionary monetary policies have promoted greater financial participation and so interconnection, which is also expressed by a greater pooling of c...

Lead - Lag Relationship between Spot and Futures Market of Indian Metal Commodity Market

Abstract: This paper examined the lead-lag relationship between the futures market and spot market for the metal commodity market during the sample period January 2010 through August 2014. The econometric tools like Unit root tests, Johansen co-integration test and Pairwise Granger Causality tests were employed in the study. The Augmented Dickey Fuller tests and Phillips-Perron tests employed in the study proved that both the selected metals markets were stationary series, Johansen co-integration test proved selected metals spot and future markets are co-integrating each other and the Granger Causality test proved uni-causality relationships among these markets between spot and future market return series during the study period.

Countering the Resource Curse: A Comparative Analysis of Political Economy for Chile and Australia

Abstract: : This thesis attempts to explain how advanced economies with large mining sectors, like those of Australia and Chile, have managed to avoid the resource curse. Minerals (iron ore and coal) account for over two-thirds of Australia s exports, and minerals (copper) amount to over two-thirds of Chilean exports as well. Hence, Australia and Chile have been labeled as commodity-based economies in the past. There is some validity to this claim, as Chile has gained significant fiscal revenues from copper sales, and Australia has experienced a mining boom over the past two decades, coupled with the rise of China. This work examines the relationship that natural resource mining and governance has to the political economy landscape of both countries. Using a historical institutionalist lens, various trends in the political economies of both nations are examined in relation to resource curse factors, such as developmental indicators, mining-specific policy and rents therefrom, and Dutch Disease. This thesis argues that the governments of both countries developed very different means to manage commodity market boom and bust cycles. Specifically, Chile has innovated counter-cyclical fiscal policies and copper funds, while Australia has pursued a more neutral fiscal policy with little intervention into mining by the commonwealth (until recently). The strengths and weaknesses apparent to both governments management of their mining sectors is explained and compared against resource curse factors. Forecasting is also presented to include possible ramifications from recent changes to the political economy of both countries in light of large downward swings in commodity prices and a slowdown in China.