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Major market move for Trump this week
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Gamble coincides with rallies alongside Elon Musk
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Blue Wall polls must worry Democrats
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Its the most significant market move in weeks. From ceding favouritism following a decisive loss in the TV debate, to switching back and forth with Kamala Harris, Donald Trump has regained a clear advantage in the Betfair Exchange Election Winner market. What's driving it?
Remember, the betting remains very tight and could just as easily switch back in the space of a few hours. This is the closest election in living memory, whether in terms of betting, polls or otherwise. In such a scenario, bettors are looking to identify any small point of difference. How about these?
1: Belief that polls understate Trump
As it stands, this new confidence in Trump is not shared by polling models. Last night, both Fivethirtyeight and Nate Silver made Harris favourite by a 53/47 margin, Decision Desk by 52/48.
This is not the first time that polls have been cooler on Trump than betting markets. That was consistently the case in 2020 and, whilst both were ultimately correct in favouring Joe Biden, the tighter betting was vindicated by the narrow margin. In 2016, Trump upset both the odds and polls to beat Hillary Clinton.
It is hardly surprising, therefore, that many believe whatever the polls say will understate Trump. That there are 'Shy Trumpers', or a group of his supporters that polls simply cannot pick up. This is a dangerous assumption. Pollsters adjust their samples to correct previous misses, and often over-react. US polls badly overestimated Republicans in the 2022 midterms.
I introduced another explanation for the 2020 and 2016 results in this recent article, referencing Carl Allen's new book, "The Polls Weren't Wrong". In short, the polling averages about the Democrat were accurate, but the undecideds/third parties broke strongly for Trump. The problem with expecting a repeat is that undecideds are very thin on the ground this time.
2: The Blue Wall looks less bombproof
For me, this is a better explanation. The best case for backing Harris is that she will almost certainly win the electoral college if defending the 'Blue Wall', which consists of Pennsylvania, Wisconsin and Michigan. A couple of weeks ago, the last two showed clear Democrat leads while PA looked a toss-up.
They were also well ahead in the Senate races, coming off the back of excellent 2022 results. Critically, all three have Democrat Governors and state legislatures, meaning any attempts on Trump's behalf to delay or refuse certification of results are set to fail
Now, they all look toss-ups. Michigan's large Arab-American population could be problematic for Harris, with voters angry about the administration's support for Israel during the Gaza conflict likely to defect or abstain. The Senate races both there and in Wisconsin have tightened. Trump is doing constant rallies across the region. If she were to lose just one of these states, Harris's path to victory becomes much harder.
3: Does gender bias affect betting markets?
With the exception of 2016, Trump and MAGA candidates have been consistently overbet. The chances of him being impeached were massively underpriced. The Democrats were solid value to win Congressional races in 2018 and 2022. For a very long time, Biden was the outsider in 2020 and especially so in-running on election night.
I think the explanation is that Trump, like nobody else ever in politics, triggers a partisan reaction on both sides. The purpose of his propaganda is to drive wedges in society. That division has always been gender-based, and is even more so with a female opponent and abortion a central issue.
Betting does not exist in a vacuum, untouched by the dynamics of society. The overwhelming majority of bettors are male. Over 90% is my confident guess. In an election where the gender gap is greater than ever, it is likely to impact the betting in his favour.
4: The Elon Musk effect
This is related to the gender gap point. I have long argued that the biggest market moves for Trump coincide with his campaign activity. His predominantly male base are buoyed, excited by the rallies and extra advertising, and rush to back their man. It is rarely rational or based on actual changes in the race.
Who does this mirror? Elon Musk. The perfect example of a 21st century, social media-driven personality cult. The shares of his companies have consistently been driven up by hype rather than performance. He has acknowledged a deep belief in the power of memetics. Since buying Twitter, and turning it into X, the platform has been swamped by far-right propaganda. Musk himself is going at it hell for leather every day, and now he's literally campaigning for Trump.
Earlier this week, I contemplated whether aligning with Musk was a positive or negative for Trump in our Live Blog. On the level of association and campaigning together, I'm sceptical, but having the world's largest news aggregator on your side is a huge advantage and compensates for Trump's cash deficit against Harris. It certainly helps generate hype and potentially move the odds.
5: A partisan Supreme Court
There is a strong argument that Trump's odds should always be shorter than what they would be in a conventional, 'straight' election, simply because of the 6-3 Republican advantage on the Supreme Court. They have already rushed through the shocking ruling to give Trump immunity for criminal acts conducted in his official role as President. As experts pointed out, that effectively means Biden could order Trump's assassination on grounds of national security, or any other political opponent, spurious or not.
If the court is willing to do Trump's bidding in that case, what chance they take the Democrat side in any election disputes? And, be clear, if Trump loses there will be countless complaints and legal challenges. The Republicans have stuffed election boards across the country with 2020 election-deniers. Commentators ignoring or skirting around these issues are frankly delusional, and have learnt nothing from the events of January 6th, 2021.