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Markets That Matter – 2021 July – Newsletter

Stock markets continue pushing to new highs while an ever-so-slight shift in policy from the Fed finally caused some movement in FX. Memestock mania didn’t seem to last too long while crypto continues to consolidate. In this month’s letter, we look ahead to what’s to come in July with a particular focus on the bond market – but first, let’s take a look at some of the main market stories and themes from the past month:

Latest Market Stories

Finance in football (soccer)

It wasn’t long ago that we saw U.S. investment bank JP Morgan involved in a proposed breakaway league in Europe, the ‘European Super League’.

They were at the heart of financing the new league by offering debt worth $4bn to the clubs involved. The proposal lasted a matter of days as most of the clubs involved quickly withdrew following an incredible backlash from fans. JP Morgan said they ‘misread’ the situation… 

More recently we have seen the European Championships commence and Goldman Sachs make their usual ‘modelling predictions’ of the winners. Despite using different modelling than in previous tournaments, it’s safe to say they got it quite wrong again. Firstly, they predicted Belgium would win it. They got knocked out at the Quarter Final stage. Then they suggested ‘Football is coming home’ by having England down to win – of course this was the main reason why England then went on to lose the penalty shootouts to Italy in the final.

On the other hand, winning the Euros really can help your stock market.

Of the last five tournament winners, Greece and Spain’s bourses outperformed pan-European STOXX 600  after their 04 and 08 and 2012 wins, while only Portugal’s 2016 title was followed by notable underperformance.

Keep an eye on the IT40 (Italy’s stock market) in the coming weeks!

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