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Goldman Sachs Predicts Brazil Will Win 2014 FIFA World Cup

NEW YORK (TheStreet) - After crunching the numbers, economists at Goldman Sachs (GS - Get Report) believe host nation Brazil is the odds-on favorite to win the 2014 FIFA World Cup.

Goldman's analysis also shows that if Brazil's star players Neymar, Dani Alves, Oscar and Hulk can pull off a World Cup win, there are strong odds stock markets in the country will outperform global indices in the month after a victory. A second place finish, however, should have investors running for the hills.

After conducting a regression analysis on about 14,000 international football matches since 1960, and accounting for explanatory variables such as performance at previous World Cups and whether a country is playing at home, Goldman said in a Wednesday client note Brazil is the favorite to win the World Cup. Brazil is currently fourth in the Coca-Cola/FIFA World Rankings.

Goldman gives Brazil 3:1 odds of winning the World Cup and a 48.5% probability of victory. Argentina comes in with the second highest odds at 9:2 and a 14.1% probability of winning. Other teams with a chance include Germany with 11:2 odds or a 11.4% probability of winning, and Spain at 13:2 odds or a 9.8% probability of victory.

The lowest odds in this year's World Cup go to Costa Rica at 3000:1, or a 0% chance of victory. Other teams with a 0% probability of winning include Cameroon, Japan, Iran, Honduras, Ghana and Algeria.

The United States, captained by Seattle Sounders forward Clint Dempsey, is given 250:1 odds by Goldman Sachs, or a 0.5% probability of winning the World Cup. [TheStreet: "We like the sound of those odds!"]

The report, Goldman's fifth since the 1998 World Cup in France, was conducted by chief economist Jan Hatzius, U.S. economist Sven Jari Stehn, and Donnie Millar.

This year's report is Goldman's first without former asset management Chairman Jim O'Neill, who invented the bank's World Cup guide and also coined the phrase 'BRIC,' an acronym used by economists and investors to denote the world's four major emerging economies: Brazil, Russia, India and China.

Brazil Beats Argentina

Goldman predicts that Brazil, Germany, Argentina and Spain will reach the semifinals of the 2014 World Cup and that Brazil will beat Argentina by a score of 3-to-1 in the Cup final.

However, Goldman said on Wednesday it would update its model daily during the World Cup. It is also worth noting that Goldman incorrectly predicted Brazil would win the 2010 World Cup. Spain, the team Goldman gave the second highest odds, won.

Goldman's Dream Team

Clients of Goldman Sachs selected Brazil's Neymar, Lionel Messi of Argentina and Portuguese sensation Cristiano Ronaldo as the three best forwards in this year's World Cup.

The dream team, as voted by Goldman clients, also includes Eden Hazard of Belgium, Andres Iniesta of Spain, Franck Ribery of France, Dani Alves of Brazil, Sergio Ramos of Spain, Thiago Silva of Brazil and Philipp Lahm of Germany. German goaltender Manuel Neuer was voted as the top net minder by Goldman clients.

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