Daily Commentary

MarketMinder’s View: With just 10 days until the tournament’s opening match, World Cup fever is heating up stateside—as are rosy economic growth projections that typically accompany massive entertainment events: “The World Cup is expected to deliver $17 billion in additional gross domestic product for the United States, according to a forecast from FIFA, the organization behind the event. The total event-related expenditure, meanwhile, will tally at about $11 billion, FIFA said.” Economic forecasts’ limitations notwithstanding, scaling and perspective are critical here. As one research outfit estimates, “While sizable, the GDP gain forecasted by FIFA would amount to a fraction of the vast output from the U.S. economy. The anticipated benefit clocks in at less than 0.1% of annual U.S. GDP, Denmark-based Saxo Bank found in a report this week. ‘In other words, the 2026 World Cup is not a meaningful growth driver for the United States,’ Saxo Bank said.” As the article explains, “mega events” tend to benefit certain businesses over others—French economist Frédéric Bastiat’s “broken window fallacy” in action. For instance, the World Cup may bring soccer fans who will spend at Philadelphia’s bars and eateries, but the tournament may also end up scaring away tourists who wish to visit the Liberty Bell or Independence Hall. Said another way, World Cup-related transactions replace others that would have happened if the matches were held somewhere else. Mega events don’t necessarily add to economic output. They move it around—creating winners and losers. As the analysts herein sensibly note, “Much of the revenue often ends up in the coffers of the business putting on the event, while the tourist dollars largely serve to replace sales that would have happened anyway in major cities during the busy summertime season.” We don’t mean to be a downer as we enjoy the World Cup as much as the next sports fan. But don’t expect the tournament to add heaps of new economic output.

MarketMinder’s View: While Iranian forces have significant sway over shipping traffic (particularly for oil and gas products) through the Strait of Hormuz, reports like this one paint a better-than-feared reality—helping explain stocks’ rise to all-time highs recently. “U.S. Central Command has guided around 70 commercial ships through the strait, traveling into and out of the Persian Gulf, in the last three weeks, one of the officials said, speaking on condition of anonymity to discuss operational matters.” The article notes these US-guided tankers are turning off their transponders to avoid detection and crossing the Strait on routes away from the Iranian coastline, where most threats lie. Though Strait traffic is still nowhere near pre-war levels, it appears governments and private businesses are getting creative with shipping routes to bring tankers in and out of the Persian Gulf, where “many vessels have been stranded for weeks, losing money and leaving their crews in trying conditions.” This is the kind of adaptation many initially overlooked during markets’ swift, correction-like slump in March as the war broke out. The situation bears watching as reports vary on the pace and progress of ongoing US-Iran peace talks, but this development provides evidence of the better-than-feared economic environment few fathomed as markets sank earlier this year.

MarketMinder’s View: This fact-packed article about Japan’s -3.09 million population drop between 2020 and 2025 doesn’t make any economic or market claims. But it does show a long-running fear about economics and markets—demographic decline—coming true. A -3.09 million person drop in five years is Japan’s biggest decline on record, amounting to -2.5% and over triple the population drops in the prior two five-year periods. And while the household count rose, “This is believed to be due to an increase in the number of single and elderly people living alone. The average number of people per household fell to a record low of 2.15.” This will all have implications for redistricting, which will unfold later this year alongside a parliamentary debate over reducing seat count. But do you know what we don’t see implications for? Japan’s economy or markets. Japanese GDP grew 6.7% in this stretch and 2.0% since 2019, to account for 2020 being a COVID-depressed base (per FactSet). Japanese stocks rose just fine, with their underperformance tied more to the US’s Tech boom and overall domestic sector makeup than inherent weakness. Businesses are adapting with automation and efficiency gains.