In March, April and May, I wrote about the Iowa Electronic Markets, a set of educational, nonprofit markets about future events, especially political ones. People put real money into an account and can buy shares in the outcomes that they think are likely to happen. The IEM offer a different perspective on the future than either polls or pundits. The markets integrate a wide variety of knowledge and insight. So, what are the IEM saying now about the conventions and November elections?
First, the Republican nominee: Donald Trump. He is up around 95% (these graphs almost never go to 100% for a candidate, to allow for black swan events and some profit). There has been a wee bit of a rise in the “anyone else” stock, colored red orange, but the market does not believe that the poor GOP has any way to avoid nominating Deadbeat Don.
Next, the Democratic nominee: Hillary Clinton. The market hasn’t changed its mind about this for the past five months. From February on, she has been above 85% with occasional small bobbles. Currently, both Sanders and “rest of field” (meaning, who knows?) are both around 5%. This is the share price for gamblers who like 20:1 odds because every so often they pay off.
The vote share market is where wins versus waves versus tsunamis show up. As you can see, the vote share market has almost always shown an edge for the Democrats. The advantage started to widen in January as the Republican field narrowed to some of its least attractive members and continued to widen as Trump came to the fore. It narrowed for about a month midApril to midMay and has stabilized (if anything, widening in the past few days). What is striking about the current values is that they forecast a significant vote for third party candidates. Share prices are independent (someone noticed earlier that the sum of the Democrats and Republicans went about 100 for awhile).
Quotes current as of 11:15:01 CST, Thursday, June 16, 2016.
Symbol |
Bid |
Ask |
Last |
Low |
High |
Average |
UDEM16_VS |
0.550 |
0.570 |
0.570 |
0.570 |
0.570 |
0.570 |
UREP16_VS |
0.440 |
0.450 |
0.440 |
--- |
--- |
--- |
The winner-take-all market is where the probability of any win shows up. The drop in the blue line, mirrored in a rise in the red line, happened midApril while Trump had his all too brief honeymoon after securing the Republican nomination. It’s very clear from the reversal that the honeymoon is over. The WTA markets have always predicted the winners in past elections — but rarely has the price share been this high, this early.
And saving the best for last, the market thinks the odds of Democrats taking back the Senate are better than two to one! Getting just the Senate is selling ~50, while getting both back is around ~20. I like those odds, and they look to get better and better over the season.