December 16th, 2010
06:20 AM GMT
(CNN) – As Australia nursed its wounds from a humiliating Dec. 7 cricket defeat at the hands of England in the second test of the 2010 Ashes tournament, the nation was soon buoyed by news that unemployment rates fell to 5.2%.
That struck a chord for Andrew Barrelle, a Sydney trader for Merrill Lynch. “I was sitting at my desk last Thursday afternoon when it seemed to click: Australia started to do poorly in the Ashes since 2005, and it seemed to coincide when our economy started going up,” Barrelle said.
Jumping on his Bloomberg terminal, Barrelle compared UK and Australia unemployment rates to performance at the biennial Ashes test match series – and was shocked by how right his hunch proved: When England does well in the Ashes, unemployment there rises – and vice versa for Australia.
“I was surprised to the extent to which it’s matched, even the volatility matches,” Barrelle said.
So what does this mean? Barrelle estimates that, based on the historical record and current unemployment, England will win the series by 2-0 or 3-1. However, “a 3-0 or 4-0 result would spell real problems for the UK economy – a rise in unemployment by 1-2%,” Barrelle wrote in his subsequent research note.
Also - tongue firmly in cheek - Barrelle recommended “it is in the UK unemployed best interests” that England should take out star players Alastair Cook, Graeme Swann and Kevin Pietersen.
“The UK public should be thanking the bankers and Gordon Brown for their recent ashes success,” Barrelle concluded.
Barrelle’s work joins the pantheon of unusual economic indicators, such as the Super Bowl Indicator (if the team that wins was an original member of the National Football League, the market will go up for the year; if from the old American Football League, the market will go down).
Or the Sports Illustrated Swimsuit Issue Indicator – if the cover model is from the U.S., the S&P 500 will outperform for the year; if the model is non-American, the S&P will underperform. Both indicators, though random, are surprisingly accurate over time.
Does Barrelle think there is a real link between Ashes success and poor economic performance? “I think it’s a coincidence, a bit of fun … but it holds up reasonably well,” Barrelle said.
That could be good news for England as it begins its third test Ashes play in Perth Thursday – UK unemployment rose unexpectedly to 7.9% in the third quarter, government figures showed Wednesday. (True to form, by lunch Thursday Australia was down 4-65).
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