State of election markets: 331 Days

The main outline of the GOP primary was stable this week; the establishment (Marco Rubio, Jeb Bush, and Chris Christie) is 60% to win and the non-establishment (Ted Cruz and Donald Trump) is 40%. But, there was an interesting shift within the non-establishment derby after Trump announced a proposed ban on all non-citizen Muslims entering the United States. Trump has ceded Cruz a lot of his position over these last few days.

Cruz refused to denounce Trump’s comments about Muslims; their positions nearly indistinguishable. This shift of probability of victory is not about a meaningful policy difference between the two candidates; this is not about the sentiment of the GOP voters; this is about likelihood of actually winning. Cruz is simply more likely to win the battle over Trump for the non-establishment vote; he has a sizable war chest and he is practiced politician. Cruz is on a huge upswing in Iowa and it is likely that the non-establishment wing could coalesce around Cruz after a win in Iowa.

Meanwhile, the establishment candidates are keeping a relatively low profile. All of them shied away from directly condemning Trump as well, but offered a little more space. Overall, their social policies are less dominated by overt Christian overtones and their economic policies are extreme supply-side (huge tax deductions, with minimal spending cuts), but not gold standard extreme. Rubio is hoping to capture New Hampshire; as the clear establishment leader there, he needs establishment voters to flee Bush and Christie after the voters sense the danger of losing the nomination after a big loss in Iowa.

PredictWise_GOPNOM_20151213

Vertical Lines: Trump announcing on December 7, 2015 that he would ban non-citizen Muslims from entering the United States.
Sources: Betfair, Hypermind, PredictIt, http://twopointoh.predictwise.com/politics/2016RepNomination

If you are interested in the Democratic nomination, here is the link: http://twopointoh.predictwise.com/politics/2016DemNomination. Clinton is going to win.

The next debate is the Republican debate on Tuesday, December 15.The Democrats will meet on Saturday, December 19 (because, you know, everyone wants to watch politics on Saturday nights during holiday breaks).