• Harris suddenly weak in the betting

• Has she already peaked?

• Trump's crime messaging has potential

By the standards of market moves this deep into a US Presidential Election, the last couple of days have been significant. The odds about Kamala Harris had been on a one-way train towards favouritism ever since she became the presumptive Democrat nominee, down to a low of 1.8810/11.

Market trajectory surprising ahead of DNC

This, ahead of a huge week for her at the Democratic National Convention, which many of us thought would give her further momentum. I made a decision to not lay any of my Harris position back until at least a week after the convention, hoping her odds will shorten further.

Perhaps they will, but the market trajectory says otherwise. Trump has come in from 2.245/4 to 2.111/10, while Harris has drifted to 1.981/1. At this rate, favoritism could switch within hours. But why?

Key states looking good for Democrats

The polls are definitely promising for Harris. She's moved clearly ahead on all the polling averages and, most importantly, is surging in key states. Take Pennsylvania and Arizona. Win those two and only an electoral miracle can stop her from winning the presidency.

As noted last week, the gap between presidential polls and very pro-Democrat Senate races suggests to me that Harris has far more room to grow than Trump among the undecideds in those states.

One might expect her to get a bounce from all the extra publicity at the DNC. The party will get blanket publicity all week, celebrity endorsements and will very likely put on a good show. Harris and Tim Walz already have a big approvals advantage over Trump and J.D. Vance. Those numbers may very well extend this week, given the extra exposure.

2020 saw no convention bounce

Historically this would have been the case but in 2020, neither Trump or Biden got a meaningful convention bounce. It seemed that opinion had become fixed on both sides of ultra-polarised US politics.
If that is still the case, perhaps Harris has peaked already. As discussed earlier in our US Election Live Blog, her upwards trajectory has coincided with vast publicity and could represent a honeymoon period.

Both theories are plausible, and vindicate a more-or-less tied race. Here's another theory. Trump odds surge at moments when his campaign ramps up its operations. Its ads, memes and rallies. This week, he has rallies scheduled in several key states including Pennsylvania.

Anti-Harris ads are ramping up

Recent days have seen the revived @realDonaldTrump account post AI memes of him and Elon Musk, and then this AI-generated ad painting Harris as a communist. This follows the unveiling of the Harris economic plan, taking on 'price gouging' and defending consumers against corporate greed, in keeping with her record.

pic.twitter.com/H0ExcNXBdl

-- Donald J. Trump (@realDonaldTrump) August 18, 2024

In addition to attacking her left-wing economic record, Republicans are making ads about another potential weak link - her record as a liberal prosecutor in California. In particular, specific incidents like her contributing to the bail fund of a man who would go on to murder after being released.

As the DNC opens, at @J_L_Partners and @dailymail we tested anti-Harris arguments that her opponents may use

The fact Harris wanted to make cannabis legal *helps* her. The most damaging is her support of a bail fund that led to a murderer's release

More: https://t.co/wysC4n5XhE pic.twitter.com/Qep6ButdYY

-- James Johnson (@jamesjohnson252) August 18, 2024

I am reminded of a huge gamble on Trump around the time of the RNC in 2020. There was no polling evidence to justify it and much bemusement as to why among the political betting community.

Crime messaging helped Trump in 2020

But there was massive enthusiasm among Trump supporters during that RNC, and extra activity on social media. It coincided with the amplification of his 'Law and Order' messaging, attacking the Black Lives Matter protests and accusing Biden of wanting to 'defund the police'. The negative campaigning sparked enthusiasm on the attacking side, which feeds into markets.

With hindsight, that gamble had more substance than mere 'fandom'. As the aggressive messaging was amplified, bettors who believed it would be effective decided this was a good time to back their man.

In terms of the market trajectory, they were wrong. Biden shortened from then until polling day. But given the result was a lot closer than the polls, perhaps they were onto something. The BLM riots and false 'defund the police' narrative did damage Biden and down ballot Democrats. Today's Trump backers may be betting on the race moving their man's way, as it becomes more clearly framed.

Harris is still the better short-term trade

I do believe crime and the economy are weak links for Harris. I'm not at all convinced it will shift many anti-Trump voters away from her, because sentiment is too strong. But left-wing branding may well hurt her and, in such a tight race, even tiny losses could prove ruinous.

None of this has yet altered my strategy. I do think she will get a convention bounce, that her polls will improve, simply because many voters are only now engaging and considering Harris/Walz, both of whom are performing very well so far. I remain doubtful that 'Marmite' Trump can ever win over sceptics. If these wider branding or policy issues are to make the difference, that will come later, as the campaign intensifies around and after the first TV debate. At least until then, hold on to Harris bets.

Now read US Election 2024: Senate polls imply Harris will increase her advantage