25 June 2018 10:26AM EDT Roaring Louder (23 24 June) Though our model correctly predicted that England and Belgium would win their matches, the margins of victory England 6 1 Panama (vs GS 1.87 0.57), and Belgium 5 2 Tunisia (vs GS 1.72 0.84) were wider than expected. The model was also surprised by Poland s 0 3 loss to Colombia (vs GS 1.32 1.38) and the Korean Republic s 1 2 loss to Mexico (vs GS 0.69 1.36). Germany s 2 1 defeat of Sweden was in line with our expectation (vs GS 1.51 1.07), and we anticipated a draw between Japan and Senegal (albeit with a 1.40 1.07 scoreline rather than 2 2). For England fans who might find themselves daring to dream, our updated model predictions might constitute a beacon of hope. We continue to predict that Belgium will top Group G, ahead of England, using the unrounded goal difference as the tie-breaker on points. After a projected victory over Colombia in the Round of 16, we now expect England to meet Mexico in the quarter-finals, rather than meeting Germany. This tips the outcome in England s favour, as they are projected to defeat Mexico, before overcoming Spain just in the semi-finals. In turn, this would set up a Brazil England final on 15 July (though those hoping for an England victory should look away now). Germany are now expected to finish second in Group F, which sets up a Round of 16 match and an early tournament exit against Brazil (GS forecast Brazil 1.70 1.37 Germany). Jan Hatzius +1(212)902-0394 jan.hatzius@gs.com Goldman Sachs & Co. LLC Sven Jari Stehn +44(20)7774-8061 jari.stehn@gs.com Kamakshya Trivedi +44(20)7051-4005 kamakshya.trivedi@gs.com Nicholas Fawcett +44(20)7051-8321 nicholas.fawcett@gs.com Manav Chaudhary +44(20)7051-3063 manav.chaudhary@gs.com Lorenzo Incoronato +44(20)7774-8413 lorenzo.incoronato@gs.com As the tournament heats up, the winning margins are becoming wafer thin, especially for England. This is reflected in the winning probabilities, which capture a sense of how easy the path to the final will be for each country. On this score, France still commands the greatest chance of winning, given that we expect more decisive results in the knockout stages. Germany s probability has recovered somewhat, given their strong chance of making it past the group stages. But this doesn t alter our earlier observation that the four most probable winners are (in descending order) France, Brazil, Belgium and England. Looking ahead, the forecasts for today s matches from our model are now: n Monday 25 June o Uruguay 1.50 1.37 Russia o Saudi Arabia 1.18 1.07 Egypt Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html.
o o Spain 1.79 0.76 Morocco Iran 0.89 1.52 Portugal Manav Chaudhary, Nicholas Fawcett, and Sven Jari Stehn We would particularly like to thank Adam Atkins of GSAM for building the models and running all of the simulations. Exhibit 1: World Cup Probabilities World Cup Probabilities Round 16 Quarters Semis Finals Champion France 100.0 74.9 46.0 25.4 15.1 Brazil 88.5 57.2 37.4 23.4 14.9 Belgium 100.0 71.0 39.1 22.0 11.7 England 100.0 68.7 36.7 20.2 10.1 Portugal 80.6 48.7 28.1 15.3 8.3 Spain 97.3 57.8 32.5 16.6 8.3 Germany 79.9 41.4 23.7 13.3 7.4 Uruguay 100.0 43.1 21.8 9.9 4.2 Mexico 88.1 45.8 20.4 9.7 3.8 Denmark 82.4 48.1 21.7 9.2 3.6 Russia 100.0 41.1 18.3 7.6 3.2 Colombia 65.8 25.8 11.4 5.0 2.0 Croatia 100.0 40.9 14.6 5.4 1.7 Switzerland 93.4 36.7 13.6 5.0 1.5 Argentina 48.0 17.6 8.1 3.3 1.4 Japan 80.2 23.6 7.7 2.4 0.7 Sweden 29.9 11.9 4.8 2.0 0.7 Iran 22.1 9.4 3.6 1.2 0.4 Australia 17.6 8.3 2.8 1.0 0.3 Serbia 18.0 6.7 2.4 0.8 0.3 Senegal 54.1 10.9 2.7 0.7 0.2 Nigeria 41.1 7.6 2.0 0.4 0.1 Iceland 10.9 2.6 0.8 0.2 <0.1 Korea Republic 2.0 0.4 0.1 <0.1 <0.1 Egypt 0.0 0.0 0.0 0.0 0.0 Saudi Arabia 0.0 0.0 0.0 0.0 0.0 Panama 0.0 0.0 0.0 0.0 0.0 Tunisia 0.0 0.0 0.0 0.0 0.0 Peru 0.0 0.0 0.0 0.0 0.0 Costa Rica 0.0 0.0 0.0 0.0 0.0 Poland 0.0 0.0 0.0 0.0 0.0 Morocco 0.0 0.0 0.0 0.0 0.0 25 June 2018 2
Exhibit 2: Group Stage Projection Group A Group B Uruguay 3 0 0 4 1.00 2.1 9 Spain 2 1 0 6 4.00 2.0 7 Russia 2 0 1 9 3.00 6.9 6 Portugal 2 1 0 6 4.00 1.6 7 Egypt 0 1 2 2 5.00-3.1 1 Iran 1 0 2 2 3.00-0.6 3 Saudi Arabia 0 1 2 1 7.00-5.9 1 Morocco 0 0 3 1 4.00-3.0 0 Group C Group D France 3 0 0 5 2.00 2.6 9 Croatia 3 0 0 7 1.00 5.5 9 Denmark 1 1 1 3 3.00 0.4 4 Argentina 1 1 1 3 5.00-2.2 4 Australia 0 2 1 3 4.00-0.8 2 Nigeria 1 0 2 3 4.00-0.8 3 Peru 0 1 2 1 3.00-2.2 1 Iceland 0 1 2 2 5.00-2.5 1 Group E Group F Brazil 2 1 0 5 2.00 2.9 7 Mexico 2 1 0 4 2.00 2.2 7 Switzerland 1 2 0 4 3.00 1.4 5 Germany 2 0 1 4 3.00 1.1 6 Serbia 1 0 2 3 4.00-0.9 3 Sweden 1 1 1 3 3.00-0.2 4 Costa Rica 0 1 2 1 4.00-3.4 1 South Korea 0 0 3 2 5.00-3.1 0 Group G Group H Belgium 2 1 0 9 3.00 6.1 7 Colombia 2 0 1 6 3.00 2.7 6 England 2 1 0 9 3.00 5.9 7 Japan 1 2 0 5 4.00 0.8 5 Tunisia 0 1 2 4 8.00-3.4 1 Senegal 1 1 1 5 5.00 0.3 4 Panama 0 1 2 2 10.00-8.6 1 Poland 0 1 2 2 6.00-3.8 1 *Goal difference uses the unrounded goal predictions from the model Exhibit 3: Bracket Projection Round 16 Quarter Finals Semi-Finals Finals Semi-Finals Quarter Finals Round 16 1 1 1 France 1.50 5 Spain 1.55 1 Argentina 0.93 1 1 5 Russia 1.19 9 France 1.24 # Spain 1.35 0 9 Portugal 1.12 # Denmark 1.06 0 2 Uruguay 1.01 6 Croatia 1.15 2 Portugal 1.32 0 1 0 6 Denmark 1.40 # France 1.26 # Brazil 1.59 # Spain 1.17 1 # Brazil 1.44 # England 1.17 # England 1.20 1 3 Brazil 1.70 7 Mexico 1.27 3 Germany 1.37 1 0 7 Switzerland 0.97 # Brazil 1.51 # Mexico 1.08 1 # Belgium 1.20 # England 1.43 0 4 Belgium 1.77 8 Colombia 1.22 4 Japan 1.02 8 England 1.56 25 June 2018 3
Disclosure Appendix Reg AC We, Jan Hatzius, Sven Jari Stehn, Kamakshya Trivedi, Nicholas Fawcett, Manav Chaudhary and Lorenzo Incoronato, hereby certify that all of the views expressed in this report accurately reflect our personal views, which have not been influenced by considerations of the firm s business or client relationships. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs Global Investment Research division. Disclosures Global product; distributing entities The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs on a global basis. Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on macroeconomics, currencies, commodities and portfolio strategy. 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