## Conditional Probabilities are Hard to Determine

One tempting thing to do with market-based probabilities of victory is to determine the conditional probability of candidate winning the general election; simply divide the probability of victory of getting the nomination by the probability of winning the general election! But, there are two serious problems with that: (1) most candidates have too much uncertainty in the probability relative to the absolute value, making the statistics poorly defined (addressed in this paper I wrote with David Pennock) (2) candidates do not win nominations independently of their probability of victory in the general election.

Only five candidates approach a 5% likelihood of winning the general election, so I will hold this article to them: Hillary Clinton (D), Marco Rubio, Donald Trump, Ted Cruz, and Jeb Bush (R).

## State of election markets: 345 Days

My condolences to the family and friends of the victims of the vicious terrorist attack on the Planned Parenthood in Colorado. This was the 5th major terrorist attack at Planned Parenthood since the release of the doctored videos of them in July.

As we drifted from 71 to 64 days until voting starts in Iowa, the Republican primary was relatively uneventful this week. Polling front-runner Donald Trump held steady in the polls and markets, but a series of statements and actions made for a volatile week in the markets for their second place candidate. Market front-runner Marco Rubio was almost completely out of the conversation all week, leaving the smallest crack open for Jeb Bush. Polling second place candidate Ben Carson moved from unlikely to almost negligible in the markets; as the Republican debate shifts to foreign policy, he is even less likely. This gave Chris Christie a small bump to still pretty much negligible in the markets. Meanwhile, Ted Cruz, continues to be the third most viable candidate in the markets despite being fourth in the polls.

## State of election markets: 352 Days

I cut the Republican chart down to five candidates this week; four of them have a non-negligible chance of winning the nomination and, because many consider him the front-runner, Ben Carson. On the Democratic side of the election, Hillary Clinton went from dominate to nearly unbeatable as polls showed her insurmountable lead over Bernie Sanders growing. The attacks on Paris dominated political news in the past week; the effect on the markets is weakened by continued uncertainty of their eventual impact on the political scene.

## 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.

## State of election markets: 365 Days or 1 Year!

Today begins the one year countdown to Election Day 2016. Serious candidates have already come and gone (looking at you Scott Walker and Joe Biden), but while the Democratic side is basically wrapped up, the Republican side is still in a tight battle.

The top contenders for the Republican and Democratic nomination stayed stable this week. Marco Rubio continues to consolidate Republican establishment support, while Hillary Clinton, thanks to a limited debate schedule, basically walks away with the Democratic nomination.

The most interesting movement of the week was from Ben Carson, who went from unlikely to really unlikely on the strength of questions about his resume. There was no smoking gun; it is unlikely that any individual discrepancy will sink his candidacy. Instead, there is concern about both the confluence of questions and about what else the public does not know about the un-vetted candidate.

## State of election markets: 373 Days

The Republican primary got another jolt this week with Wednesday, October 28’s debate: Marco Rubio won and Jeb Bush lost. Rubio won because he beat up Bush, and they are the only two viable establishment candidates left in the race. Rubio beat up Bush by dominating him on his prepared offensive about Rubio not doing his job as a senator (in Rubio’s defense, running for president is a full-time job and pretty much every candidate sucks at his day job while doing it; I am looking you Chris Christie). This was not about substance or policy, but about personalities and debating ability. Rubio looked more comfortable and confident, and on Friday, October 30, Rubio was rewarded with Paul Singer’s money.

## State of election markets: 380 Days

Hillary Clinton followed up a strong debate with the other Democratic candidates, last week on October 13, with strong debate with the Select Committee on Benghazi, this week on October 22. Consequently, she has moved from really likely to almost certainly the Democratic nominee for president. Meanwhile, in the fight for the Republican nomination Jeb Bush downsized his payroll by 40% on October 23, but he was in a freefall starting October 17 as he struggled with questions tying him to his brother, George W. Bush. Equally important is that Donald Trump refuses to go away, increasing the probability that the Republican establishment coalesces around an establishment candidate soon; and, Marco Rubio has similar establishment positions and is now perceived to be more electable than Bush.

## State of election markets: 387 Days

The biggest news this week was the Democratic debate held on Tuesday, October 13. Hillary Clinton expanded her lead in the Democratic primary both by looking strong herself and her strength dampening the spirts of Joe Biden supporters. On the Republican side Marco Rubio continued to hold tight and slightly surpass Jeb Bush at the top, while Ben Carson jockeys with Donald Trump in the second tier.

## State of election markets: 394 Days

The market was pretty calm this week with Jeb Bush continuing to hold off Marco Rubio as the most likely candidate. His polling numbers look good, but his funding is still lagging; with several month left until the first voting, a poll of money is a little more important than the poll of the people. In the lower tiers, Carly Fiorina continued to cool off a bit with a small decrease in likelihood of victory, as Donald Trump and Ben Carson refused to budge (too much). But, the most interesting market news did not occur in any market, but in polling. Gallup declared that it would run no horse race polling for the 2016 primary. Polling has officially surrendered to markets!