It is being called the revenge of the ‘soccer mom.’ After years of cheering their offspring on the touchline, the US has finally awoken to the joys of football. People of all ages were gripped by the better than expected performance of their team and the enthusiasm hasn’t abated despite being valiantly knocked out by Belgium.
Even the traders on Wall Street were transfixed and averted their eyes away from screens flashing numbers to television monitors in the room broadcasting the games. This may explain why 257m shares traded on US exchanges in the 30 minutes after the Germany versus US game’s start, about 6% less than the 12-day average before the World Cup, according to Bloomberg data. Overall though, and no connection has been drawn, the S&P 500 rose 1.4% since the tournament started on June 12, making it the best performer among the 16 countries that survived the first round of play.
While the US football team’s true grit against top European teams Portugal and Germany is still causing a stir, what is less surprising perhaps is the tenacity shown by the nation’s regulators against European banks. BNP Paribas, for example, had initially hoped to fend off a guilty plea by setting up an entirely new subsidiary to be the fall guy but prosecutors rebuffed the idea. The result was that after months of heated negotiations, the French bank paid a record fine of $8.97bn and pleaded guilty to processing billions of dollars of transactions on behalf of Sudan, Iran and Cuba that were in violation of US sanctions on those countries.
Although other banks such as HSBC and Standard Chartered have been impacted by the long arm of the US law, the size of the BNP Paribas fine sent a chill down the collective European banking spine. Many are also shivering over the latest salvo fired by Eric Schneiderman, the New York attorney-general, against Barclays, alleging its dark pool, Barclays LX, favoured high-speed traders while misleading institutional investors. Analysts believe that the probes could have repercussions for other European banks such as Credit Suisse which operates the largest alternative trading system as measured by trading volume, according to the latest data from the U.S.’s Financial Industry Regulatory Authority.
It is way too early to predict the fate of Barclay’s dark pool, but US lawsuits tend to be long drawn out affairs. However, as the BNP Paribas experience highlights, and as every ardent football fan knows, it is the hope that kills and expectations need to be managed.
Lynn Strongin Dodds
