Monday, 9 June 2014
20 Stages of a World Cup Market
It's that time again for the World Cup to influence markets so despite various opinions on the effect of markets here is a basic guide to how it will most likely go.
1- The host country doesn't get its act together and everyone sells host nation assets as it comes under the global and hedge fund spotlight who notice what a pig's ear they are making of it.
2- Arrangements for client conferences in host country proliferate hitting the absurd with respect to subject titles such as 'Latvian telecom market and how it is influenced by Brazilian logging conference 2014, Rio'
3- The host country pulls it off at the last minute and speculators buy local assets as reports start coming in from early arriving reporters about how great the hotels they have been put in are and how clean and organised their deliberately sanitised prearranged surroundings are.
4- Volatility is meanwhile sold in all major global markets as there is an assumption that markets will go quiet as all turn to their TVs. Except for US local assets as no one expects the US to understand what's going on with respect to soccer, apart from the Hispanics who tend not to live in Connecticut.
5- Huge traffic increase in Bloomberg IB soccer related chat as this is not covered by FCA / SEC regulatory information transmission codes.
6- Despite the above, a few dealers are suspended for offering bets on the World Cup outcomes (bets are not permitted).
7- Banks spend fortunes on establishing whether office sweepstakes are covered under regulatory guidelines re. insider trading, prop positions or speculation and ultimately decide to ban them.
8- Kick off - Markets are indeed quiet as the world turns to the opening matches. City bars with TVs do a roaring trade and are able to double prices from 'ridiculous' to 'downright offensive'.
9- Armchair football generals pop up in otherwise clueless sell side desks passing on informational irrelevances (involving Goalkeeper's grandmothers) in order to impress clients with their comprehensive knowledge.
10- Research desks get into the mood and provide any 'amusing' correlations they can find between any market and any soccer fact but it is Goldman who outshine with a 300 page research note on it.
11- England are out. David Cameron announces a national day of mourning and the press demand the canonisation all the members of the 1966 winning squad. Cameron acts accordingly. Ed Miliband demands an enquiry and the resignation of the whole of the Government front bench whilst Clegg promises free football coaching at all primary schools.
12- London pubs see a drop off of trade. Clients start sending regrets that they are now busy and can't attend the quarter final canapes and beer evenings in second tier banks' boardrooms arranged and accepted on the assumption that England would be playing.
13- The UK population checks its collective ancestry to see if it can claim allegiance to any surviving country in the competition and then does so.
14- UK Office for National Statistics report this vast increase in claims of overseas origin which reignites UKIP's fervour and causes mass confusion over immigration policy.
15- France is out. French politicians blame the UK.
16- Germany are the last remaining European team in the competition which divides European support along the lines of bail-out status of country of origin.
17- UK have gone back to supporting rugby, cycling, rowing and sailing (cricket having also disappointed) after declaring the whole World Cup corrupt as proven by the Qatari bid for 2022 so London markets are trading normally.
18- Prices in volatility starts to tick up as expectations of a return to a normal market return.
19- A country wins and after that country's economy takes a beer and restaurant based short term economic boost things return to normal.
20- Markets flatline and once again disappoint those long volatility positions and the next excuse for lack of activity is desperately sought.