The World Cup is coming up in Brazil this summer, so watch out.
“Bad things tend to happen in World Cup years.”
That’s the message from Dario Perkins of Lombard Street research.
For many, the soccer World Cup is a time of anxiousness and suffering, followed by chaotic collapse (usually on penalties to Germany). England fans have come to expect this but, as a client recently pointed out, the pain doesn’t always stop there. Markets also suffer around World Cup time. The inaugural competition was in 1930, the first full year of the Great Depression. But look also more recently: 1986 stock market crash, 1990 US recession, 1994 bond market blow up, 1998 Asia/LTCM collapse, 2002 Dotcom bubble, 2006 US housing crash, 2010 global recovery stalls/euro crisis starts. OK, it’s not a perfect fit. The stock-market crash came in 1987 even though the seeds were being sown in 1986, and the 2002 collapse started well before the World Cup kicked off.
He goes on to note some possible sources of blowups this year: Abenomics, China, Ukraine.
Meanwhile, here’s the chart showing spikes in volatility in World Cup years.
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