Soccer is more than just a game

Sendero Wealth Management News

Starting tomorrow, the FIFA soccer World Cup starts in Russia. The most watched sporting event in the world will be played in eleven cities over the next 30 days to crown the best soccer team. Not only is the champion a source of immense pride for the winning country, it also can mean an improvement in economic growth for the host country.  

While Russia is the largest country by area, its economy is relatively small. Smaller than Texas’ as a matter of fact. The Russian economy is ranked 11th in the world, near $1.7 trillion in nominal GDP terms, with the oil and gas industry contributing about 16%. Of course, Russia has been in the news a lot lately given its political and military influence here and abroad. 

Unlike the Sochi winter Olympics game of 2014, the economic impact of the World Cup may be limited this time. Some local retailers, restaurants and hotels will benefit of course, but the current global economic environment means any long-term effects will be negligible on the Russian economy. 

Unfortunately, the U.S. soccer team did not qualify and will not be one of the 32 teams competing for the trophy. One can draw some ironic similarities with the current economic environment: tariffs and economic sanctions, NAFTA renegotiations and new trade partnerships, the rise of populism in Europe, and central banks running at different tightening speeds. 

All this amounts to a global competition to crown the next emerging economy. The U.S. economy is by far the largest economy, but the gap is shrinking. Fierce competition is not just happening on a soccer field, but also in the areas of commodity mining and industrial plants as well as future industries such AI and robotics. 

The next economic winner will not emerge by the time the World Cup ends, but investors should be thinking today about what their portfolio of tomorrow should look like. 

Part of our research and due diligence efforts at Sendero include understanding and comparing the underlying stocks as well as sector and geographical allocations across all our active and passive strategies. 

Quick update: Canada, the U.S. and Mexico won a joint bid to host the World Cup in 2026. 

Let the competition begin!