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2020-08-31 b
Latest Election Odds

Kolanovic Says Trump Re-Election Odds Are Soaring, Prompting Nate Silver To Melt Down On Twitter

On Saturday, we showed that Trump had received a healthy boost in support following the Republican National Convention (and just around the time of the latest rioting in Kenosha and elsewhere) while enthusiasm for Joe Biden has slipped, according to a new poll by Morning Consult. We also showed that a far more dramatic race was reflected in Real Clear Politics' betting average between Trump and Biden, using data from oddsmakers Betfair, Bovada, Bwin, Matchbook, Smarkets and SpreadEx.

This morning, in his latest note, JPMorgan's Marko Kolanovic laid out "what is next for markets" and his contention was that as the data we showed over the weekend reveal, "investors should position for rising odds of Trump re-election" as "Trump’s re-election chances are rising and are already higher than currently reflected in investment styles." This matters because "the impact on sectors and factors (momentum vs value, cyclicals vs tech, ESG) could be dramatic and investment portfolios should adjust for a potential Trump re-election."

"Over the past few days, Trump’s betting odds are rapidly increasing" Kolanovic said, stating that he analyzed and quantified "2 effects that we believe are driving this shift and may significantly impact the election outcome." The JPM quant then explained that "Trump’s betting odds started plummeting with the onset of large protests in early June. During the month of August, Trump was as much as 25 points behind and investors took Biden’s election for granted (we cautioned this may be premature). However, during the month of August, Trump’s betting odds started improving, with the largest increase happening over the past week. Currently, betting odds have Trump virtually tied with Biden."

Kolanovic then asks what caused this initial collapse and then full recovery of Trump’s odds. His response: "we believe it is largely due to two effects: 1) the impact of the degree of violence in protests on public opinion and voting patterns and 2) a bias in polls due to Trump voters being more likely to decline or mislead polls", both factors we discussed extensively over the past week (here and here). (read more)

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