The FIFA World Cup is less than a month away and Goldman Sachs has released its fifth edition of its World Cup and Economics report, a "model of the probability of success in a match between any two given teams, based on their track record and characteristics."
Goldman says it's "striking" how much the home country of Brazil leads the field in odds.
"Our probability for an overall Brazil win is almost 50%," according to the report, while Germany, Argentina and Spain are favoured to clinch the semi-finalist positions.
"There is a clear pattern of outperformance by the winning team in the weeks after the World Cup final," says the report. "On average, the victor outperforms the global market by 3.5% in the first month."
This is our fifth edition since the 1998 Paris competition and the first without Jim O’Neill, who pioneered the previous versions over all those years. While it is hard to match Jim’s football craziness, the group globally is still full of fans of the beautiful game. And it is now possible to acknowledge open support for teams such as Liverpool and Chelsea, the report stated.
“We present this guide as a companion to the upcoming Rio Cup, with the usual unnatural mix of football and economics. We have turned again to famous guest contributors to help guide you through the competition. Franz Beckenbauer, German legend and World Cup Winner as both player and coach, talks about what it takes to succeed. Four of Chelsea’s Brazilian players – Oscar, Ramires, Willian and David Luiz – talk about the excitement and pressure of playing for the host nation. Angel Ubide of DE Shaw talks about the intersection of finance and football, looking at the impact of Spain’s crisis on the restructuring of Spanish football. And Paulo Leme, now Chair of Goldman Sachs Brazil, discusses the parallels between the economy and football in Brazil,” the foreword in the report stated.
The report also includes Goldman Sachs latest version of the World Cup Dream Team, selected by clients from around the world. Based on the 1,700 votes submitted, Dirk Schumacher has narrowed the list down to a line-up of 11.
Brazil will be pleased to see it emerges as the clear favourite, helped by a home team advantage, but the likely semi-finalists are Brazil, Germany, Argentina and Spain, the report stated.
In the report, Peter Oppenheimer and the Portfolio Strategy team have also looked at the links between World Cup performance and equity markets and the ‘honeymoon bounce’ that follows the winners in the weeks after the final. Yu Song and Vishal Vaibhaw look at the two missing giants – India and China – from the World Cup line-up and their hopes for the future. José Ursúa and Kamakshya Trivedi highlight some key macro trends from the history of World Cups, including disinflation in goals and the importance of land as a factor of production in World Cup victories.