State of election markets: 359 Days

On a personal note, let me share my sympathy to the people of Paris in the aftermath of this devastating terrorist attack …

Both parties debated this week and there was not much to show for it in the markets. The Republican debate was a draw for the major candidates; there was no meaningful impact on the Republican voters. The Democratic debate, at 9 PM ET on Saturday night, was designed to have no one watch, and it was the lowest rated debate of the season by far (half the next lowest rated debate). For those who watched, Hillary Clinton came in with a massive lead and nothing happened to shake that.

Marco Rubio, a distant third in the polls and a strong first in the market for the Republican nomination, had a solid debate on October 10. First, he stayed very focused on replying to all questions with snippets of his stump speech, regardless of the nature of the question. Thus, he was both passionate and made no mistakes. Fox News was happy to not challenge the candidates to answer their questions directly, after the blowback from the previous CNBC debate. Second, no attacks from other candidates stuck on him.

Donald Trump, first in the polls and second and the markets, had a reasonable debate. He has become much more polished as the season progresses and the debate showed that. While he had the occasional ad hominem attack and off topic snipe, for the most part he looked a lot more like a regular candidate. That is exactly what he needed to do.

Ted Cruz, fourth in the polls and third in the markets, had a good debate for the GOP voters. He was very forceful in his positions, like the USA returning to the gold standard. Unfortunately for him, success with the voters will bring problems with the establishment. The establishment is worried that (1) he is too extreme for them (2) he is too extreme to win the general election. Thus, his rise in the polls of Republican voters is fueling speculation the establishment will coalesce harder and earlier around someone else (i.e., Rubio) to ensure Cruz does not win the nomination.

Ben Carson, second in the polls and a distant fifth in the markets, had the weakest debate. He continued to impress the media with this confident, but wrong, statements. This time it was about the Chinese involvement in Syria. This may not be a problem with the Republican voters in the short run, but if there was a concern by another candidate or the establishment about him winning, the negative ads would be brutal. That is why the markets assume he has a negligible chance of ultimate victory.

Jeb Bush, remember Jeb Bush, had a fine debate. He is fifth in the polls and fourth in the markets. If they establishment needs a candidate today, Rubio is going to beat out Bush. If they can wait until next year, Bush has a little time to prove that Rubio is not the person they are looking for.

Vertical Lines: Republican debate on Tuesday, October 10

Sources: Betfair, Hypermind, PredictIt,

The Democrats had a debate on Saturday, November 15; no one watched. That was goal of the Debbie Wasserman Schultz, Chair of the Democratic National Committee. The idea is that no visible debates would ensure that Clinton does not get damaged by the debate process. Unfortunately, it also gives Democratic voters very little visibility into the other two candidates in the race, Bernie Sander and Martin O’Malley. It also means that the general election voters cannot get an easy comparison between the slate of Democratic candidates and the slate of Republican candidates.

 Vertical Lines: Democratic debate on Saturday, October 14

Sources: Betfair, Hypermind, PredictIt,

The next debate is the Republican debate on Tuesday, December 15. The Democrats will meet on Saturday, December 19, because tons of people will be home to watch a debate on the Saturday night before Christmas. I assume there was some sort of logistic hurdle to organize a Christmas night debate?