As World Cup fever heats up, a note of caution: the world's most widely viewed sporting event could spell trouble for markets.
"For many, the soccer World Cup is a time of anxiousness and suffering, followed by chaotic collapse (usually on penalties to Germany). England fans have come to expect this but, as a client recently pointed out, the pain doesn't always stop there. Markets also suffer around World Cup time," Dario Perkins, an economist at Lombard Street Research wrote in a note.
The international football tournament, held every four years, kicks off in Brazil on June 12 and runs for four weeks.
The inaugural competition was in 1930, the first full year of the Great Depression. More recently, it coincided with the U.S. recession in 1990, a bond market crash that started in the U.S. and spread across developed markets in 1994, the Asian Financial Crisis and collapse of Connecticut-based hedge fund Long Term Capital Management (LTCM) in 1998, a U.S. housing market crash in 2006 and the beginning of the euro zone crisis in 2010.
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"The coincidences got me thinking. What could go wrong this time? Based on past episodes, we should start by looking for bubbles," said Perkins.
Abenomics - the name given to Japanese Prime Minister Shinzo Abe's economic revival plan - is one of these potential bubbles, according to Perkins.
"Aggressive monetary easing in Japan triggered a huge surge in the Nikkei and a collapse in the yen, in the expectation that the Japanese authorities could kill deflation and shift their economy onto a better medium-term growth path. But now these policies seem to be running out of steam," he said.
The benchmark Nikkei 225 has rallied over 40 percent since Abe took office in December 2012.