‘The World Cup is not just a great global sporting event, it is also inscribed with much deeper cultural and political importance’ – Martin Jacques
Whilst the world’s trade and diplomatic issues appear to be multiplying – and continuing to impact financial markets – the international display of sporting unity that is the World Cup continues to also make global headlines. However even the pinnacle of international football is not unified. After all, Americans aren’t the only ones who don’t call football…’football’ (or its direct linguistic translation). Much of Southeast Asia, Japan, Korea, Oceania, South Africa and even Italy call it something other than a linguistic derivation of ‘football’.
Naturally the Americanised ‘soccer’ is the typical alternative, exported off the back of the ‘dollar diplomacy’ push at various times during the last century. ‘Football’ versus ‘soccer’ is hardly a battle worth worrying about but it goes to show that the same game can go under different names – and we may struggle to say that about ‘fair trade’ and ‘free trade’, the current minor linguistic difference which is causing such trade angst. The former, of course, is a desperately personally subjective ideal…and the latter is a theoretical ideal that has never been completely accomplished even in nominally free trade zones. Look at Europe’s Common Agricultural Policy or the recent bust-up between Canada and the United States – both members of the North American Free Trade Association – over issues such as dairy sector subsidies and tariffs.
On the football field, the rules of the game are absolute…and technology has added a new angle to the World Cup with the VAR (Video Assistant Referee) system that has tried to right wrongs and assist the actual referee in making correct decisions when, in a fast-moving game, his eyes cannot be everywhere. As the record number of penalties at this stage of a World Cup shows, technological evolution comes with an impact.
VAR also influences the financial markets although, in this setting, it typically refers to ‘value at risk’ which has been used to help reduce the likelihood of financial sector blow-ups. It certainly is a useful tool but just like football’s VAR it comes with some impacts. New financial sector rules around stress test limitations mean well but they can be no panacea, in a fast-moving, ever-changing and dynamic world where the profit incentive leads to all types of new and different activity. My prediction is that despite all the money poured into regulation and compliance over the last ten years, the ability to spot the next financial market crisis will remain limited. Financial markets always have cycles – just not as predictable or regular as the World Cup’s own four year one.
Recent economic and social studies do suggest that the ultimate winners of the World Cup – and judging by the demolition of the mighty….Panama, it might be England – do receive a positive national sentiment boost which can help financial market related factors such as confidence and willingess to spend, although in the wider scheme of things such impacts are dwarfed by wider global issues and pressures. And to this end, the countries for which trade angst is currently most globally material and influential – the United States and China – both did not qualify. So enjoy the football (or soccer), smile at the similarities with the current financial market scene such as German team discord in Germany, Argentine underperformance, style and progress from the French, obdurate defensiveness from the Iranians and a shrugging President Putin presiding over an always surprising Russian team. I await for someone to draw a link with Brexit – but then again England’s success alone does not bode well for the United Kingdom. Rather the analogy should be of a surprising youth and vigour in an unheralded England team – and there are still plenty of surprises and relative value in the local stock market too if you look closely enough.