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Notes -
The Political Horse Race Two Weeks Out
Apologies to our foreign or American friends who may be bored by the non-stop election coverage, but I just can't get enough.
A couple weeks ago I predicted with 50% confidence (the ultimate in weasly predictions) that we'd see an October surprise timed for maximum damage to the Trump campaign. I think we just saw the attempt. It was dumb as you could expect.
Yesterday, nearly every single media outlet in the country ran the same story. The story? John Kelly, Trump's former chief of staff, supposedly once said that Trump told him "Well, Hitler did a lot of good things". Kelly also said something about Trump praising Hitler's generals. The story was first reported in 2021. It was denied by Trump the next day.
Somehow, three years later, it was front page news in nearly every mainstream outlet. It was an incredible example of media discipline and coordination. See for yourself:
https://www.google.com/search?hl=en&q=trump%20hitler%20comments
So... did it land? No I don't think so. Comparing people to Hitler is the oldest game in the book. Does anyone remember the Lyndon Larouche campaigners with their Obama-as-Hitler posters? Moreover, we've heard everything about Trump. 99% of people have made up their mind already. And Trump is also omnipresent. Today's Hitler story is yesterday's news as Trump appears on Rogan or works at McDonald's or eats a burrito bowl or something.
Harris tried to make the story work. In between cringe videos of her latest town hall appearance, her Twitter account tweeted this:
So how are the betting markets taking it? Well, there were a couple more flash crashes in Trump shares on Polymarket. Around midnight, his odds briefly dipped under 60%. Was it manipulation? I don't think so. To paraphrase Stanley Druckenmiller, sometimes it's better to just buy the rumor and then ask questions later. Maybe it was worth a gamble to see if the attack stuck.
As of right now, Trump is up near 65% again. Interestingly, his chances of winning the popular vote have crept up to about 40%. In polls, according to Real Clear Politics, Harris's nationwide lead has fallen to 0.3%, while Trump maintains a 0.9% edge in the seven swing states.
It really is too close to call at this point. Will we see a "real" October surprise against Trump? It feels unlikely. There just isn't any more unspent ammunition. Will the Trump campaign produce some valuable oppo research against Harris? Again, unlikely, since the media wouldn't report on it anyway.
The election is 12 days out, and many ballots have already been cast.
Prediction market are likely more accurate than polling. In addition to public information, prediction markets take into account variables that polls cannot readily account for, like electoral college lumpiness and turnout, as well as insider info. These tend to favor Trump, like in 2016. Or Bush in 2000. Both of whom won despite losing popular vote. So polling aggregators that give Kamala a 50% chance of winning or favorability, this translates into maybe only a 40% probability due to the aforementioned factors.
I think the whole 'Trump admires dictators' story by John Kelly was the surprise, and likely a dud. It also shows how Trump cannot stop appointing people who later turn on him. Likening someone to Hitler is so unoriginal or played out it has lost any of its potency to change minds. People acknowledge that it's just hyperbole.
Polling aggregators almost invariably create averages for state polling, too. The people giving probabilities, the modelers, also base their modeled outcomes off of state polls, so they're aware the Electoral College exists.
What's the actual record of prediction markets?
Pretty good.
Until recently, the biggest and most liquid prediction markets revolved around sports gambling. They are quite good at prediction, but skilled gamblers can do slightly better when the markets exhibit bias.
For example, if the Yankees are playing the Royals, maybe the Yankees will be favored by more than they should since there are more Yankees fans with more dollars than Royals fans.
Obviously, the more money that is involved, the better the market will be. So far, $2.4 billion has been wagered on Trump v. Harris on Polymarket.
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It's hard to say because until recently they were borderline illegal and illiquid
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