Sunday, 7 June 2009

Market moves 1-5 June 2009

The pound reached 7 month highs against the dollar and the Euro, before falling away towards the end of the week (the BBC suspected it was the political instability here, I'm not convinced).

Anyway, the bare facts are below:

FTSE: 4438.56 (up 20.62 or 0.47% in 1 week, 25.71% in 13 weeks)
DOW: 8763.13 (up 262.80 or 3.09% in 1 week, 32.23% in 13)
£/$: 1.5982 (down 2.06¢ or 1.27% in 1 week, up 13.43% in 13)
£/€: 1.1440 (up 0.04¢ or 0.03% in 1 week, 2.71% in 13)

Oil in $: 68.37 (up $2.63 or 4.00% in 1 week, 56.35% in 13)
Oil in £: 42.78 (up £2.17 or 5.34% in 1 week, 37.84% in 13)
Oil in €: 48.94 (up €2.50 or 5.38% in 1 week, 41.57% in 13)

Gold in $: 962 (down $13 or 1.38% in 1 week, up 2.78% in 13)
Gold in £: 601.93 (down 68p or 0.11% in 1 week, 9.39% in 13)
Gold in €: 688.60 (down 54¢ or 0.08% in 1 week, 6.93% in 13)

All the usual good news signals, except that the pound fell against the dollar (or rather, the dollar rose against the Euro and pound, perhaps indicating a shift in perceptions as to the consequences of recovery on the value of the dollar in the longer term).

It is notable that the oil price and stock markets have shifted far more than gold and the currencies have. That gold hasn't fallen proves that many aren't convinced that "everything is going to be okay" but demand for oil is recovering, which means that the restrictions put into place by OPEC (to limit the oil price collapse) will start to bite.

World Cup Qualifying

Today, England beat Kazakhstan by 4 goals to nil in central Asia, in an attempt to qualify for next summer's world cup in South Africa. On Wednesday they will beat Andorra by a similar margin, unless a flying pig stops the match, or something similarly implausible happens.

Why do I mention this, here on an Economics-based blog? Basically it is because I think the excercise was a waste of money. UEFA (the European football association) has been allocated 13 places, which are awarded to the winners of 9 groups, plus the 4 winners of playoffs between the runners up.

Given that there are 53 clubs in "Europe" (including Kazakhstan, Turkey and Israel, who choose Europe over Asia as their tournament of choice), it seems obvious to me that there should be some 2-stage process to whittle down the candidates and reduce the required number of games.

If the 24 weakest sides (decided by the UEFA coefficient, which is based on performances over the past few years) were to play a tournament during the same summer as the main European Championships and World Cups (that is, every even numbered summer) then the 18 weakest sides could be eliminated, reducing the field to 35 sides.

These could then be allocated into 6 groups of 6 each playing 2 matches, with the top 2 going through, reducing the chance of the "big money" teams failing to qualify (not that it saved England, who finished 3rd behind Croatia and Russia in 2007-8 qualifying for the European Championships of 2008).

The advantages:
  1. Fewer matches like England-Andorra or Germany-San Marino, resulting in fewer confidence sapping trouncings for the "minnows".
  2. More chances for the minnows to beat each other, allowing them victories in competitive matches, which will teach them much about how to beat the better sides (or at least, the in between teams).
  3. A competition that teams don't want to enter, but do want to win. If the prize of getting one of the 6 "bonus" places involves home- and away matches against 2 of Europe's 12 best sides (given UEFA seedings, one of the top 6 and another ranked 7-12 would appear in each group).
  4. Fewer journeys to more dangerous places for many of Europe's spoiled élites. Many of the less politically stable members, would be the same teams who struggle to get through this tournament, earning a double bonus.
  5. Fewer international matches, reducing the pressure on TV companies to find time in their schedules for ever more football. Already many complain of over-exposure, yet some competitive England matches are only shown on Setanta. This sort of procedure would cut 1-3 matches per year from the schedule, depending on the procedure chosen.

The downsides, as I see them:

  1. Fewer matches of the style Andorra-England. The value of this fixture is much greater to the Andorran federation than it is to England, but I still feel that they should have to earn this bonus.
  2. A tournament hardly anyone will watch. According to Wikipedia, the 6 teams who would be seeded to survive the tournament would be Latvia, Hungary, Lithuania, Slovenia, Wales and Northern Ireland. Of the other teams, I can only remember Macedonia giving a major country a hard time.

All told, I believe the benefits outweigh the costs, and have the added bonus of reducing the number of meaningless fixtures in far-flung places that fans would be mad to bother with.

To be sure, the number of European sides who qualify for tournaments does vary, and so does the qualifying method. Here is my simple guide to the more recent numbers:

12: 6 groups of 6, 2 from each qualifying. Teams come from 6 pots, with pot 1 being teams 1-6 by ranking, pot 5 being teams 25-30 and pot 6 the 6 "winners" of the minnows tournament.

13: as above, but with the 3rd placed teams competing for the final position (perhaps the 2 or 4 teams that come closest should playoff for the place)

14: 7 groups of 5 teams, 2 from each qualifying. Teams come from 5 pots, the first holding teams 1-7 by ranking, the 4th teams 22-28 and the final point consisting of 7 teams that survive a minnows tournament of all teams ranked below 29.

15 (European championships, minus host): as 12, except that the 6 3rd placed teams should playoff for the spare places.

22 (newly expanded Euro 2016 of 24, minus host and holder or 2 hosts): 11 groups of 5, with 2 qualifying from each. This would not require a preliminary minnows tournament, unless the number of UEFA countries expanded beyond 57 (and even then, perhaps only the very weakest would need to compete).

23 (24 team Euro 2016 minus host): 10 groups of 5, with 2 qualifying from each. 10 clubs to earn appearance in qualifying from all countries ranked outside top 40. Remaining 3 qualification spaces to be determined by best 3rd place sides, perhaps with playoffs to distinguish between them. It should be noted that the holder of the European Championship has never previously been granted automatic qualification, so this is the most likely number of qualifications spaces that will be up for grabs in 3 tournaments time.