On Monday, I spoke to TRT World about the impact of Hillary Clinton’s health scare on the election. I argued that, whilst the belated admission of pneumonia damaged her brand, reinforcing perceptions of secrecy and dishonesty, the incident actually presented an opportunity. If she now issues detailed medical records, it would transfer pressure onto Donald Trump to release his tax returns. We’ll see how that plays out!
Back in January, when asked to list the ten best political betting markets of all time, I took the liberty of pre-empting this year’s presidential cycle. A safe bet that has more than delivered. After the latest bout of market madness, it deserves to be number one.
From the moment news broke about a ‘medical emergency involving Hillary Clinton’ on Sunday morning, the mainstream media, internet and betting markets lost their minds. As I write, they haven’t calmed down. At 1.58 and 3.35 respectively, Clinton and Donald Trump’s combined odds equate to 93% of the book.
In other words, the market rates it 7% likely that the next president is somebody else. This is in my view completely wrong, and reminiscent of the GOP race when speculation about a contested convention left Trump and Ted Cruz at around 80%, despite nobody else being mathematically capable of winning the most delegates.
This is actually much worse, because the contested convention was a realistic possibility, (higher than an 80% chance in the betting at one stage). To get a new candidate in for the presidency now would require a truly miraculous series of events.
Now I’m not a doctor, privy to any inside information or connected to what Sarah Palin calls the ‘lamestream media’, but until somebody actually *proves* to me that Clinton doesn’t have pneumonia, I will ignore the conspiracy theories.
People get sick, especially 67 year-olds with workloads most of us cannot imagine. Given the rumours endlessly fueled by her opponents, it is perfectly logical (and in her nature) that Clinton would want to keep it secret and ‘power through’ as she put it.
It is also perfectly logical that she wouldn’t have wanted to miss the 9/11 service for anything and that extreme heat in NYC would cause great distress (especially if she wasn’t 100%). I’m 23 years younger and in good health, yet two days earlier found the heat in Central Park unbearable.
But regardless of the truth – for I know there are millions of Trump supporters who will never accept that version, and are free to take the other side of the bet – there is nothing to suggest she is pulling out of the race. And when she returns to campaigning this week, she may find that the narrative has turned in her favour.
This time last week, her deeply damaging e-mails were dominating the cycle. Now it’s her ‘deplorable’ comments and pneumonia. When she returns, her narrative will be about being back, fresh and resilient. And the news cycle will move on.
Already, the pressure has now switched to Trump to be more transparent. About his health but even more so his tax returns. Campaign manager Kelly-Anne Conway today hilariously claimed releasing medical records was an invasion of privacy. Yet another gift to the critics and invitation for media criticism.
— Andrea Mitchell (@mitchellreports) September 13, 2016
The founder of LinkedIn has pledged $5M to veteran charities if Trump releases his tax returns. The NYT editor has said he’ll risk prison to publish them. Trump own charitable contributions are under embarrassing scrutiny. All of the other stuff about Trump University and Vladimir Putin is out there too. The scrutiny that I hoped would be placed on Trump in March may have finally arrived.
Even the ‘deplorable’ comments have shifted the debate onto terms that suit Clinton. Fair or not, Trump will be constantly pressured to criticise the most deplorable elements of his support base, such as David Duke.
Many commentators are pointing out that a substantial section of his support are, indeed, racist. Soon the ‘deplorable’ tag may be directed at Trump cheerleaders like Alex Jones of Infowars – he of 9/11, birther, Sandy Hook and Michelle Obama conspiracy theory fame.
This is a much better news cycle for Clinton than the same time last week. Democrats will love Trump being associated with such people. Most Republicans will hate it.
All the while, regardless of that narrative, the fundamentals remain terrible for Trump. The electoral college map is awful, requiring a virtual clean sweep in states where he trails in the polls and is way behind in terms of organisation.
Trump and the Republicans are putting a lot of resources into North Carolina – a state Mitt Romney won and which Trump absolutely must hold to have any chance, yet trails! Meanwhile in the state that may well push Clinton over the line, Obama just hit the campaign trail, dominating headlines with scathing attacks on Trump.
Infinitely stronger Republican candidates have failed to win Pennsylvania since the 1980s. Even the theory that Trump will attract new rust-belt voters doesn’t really stack up. The Philadephia Enquirer reports that, in fact, there are 43,000 more newly registered Democrats than Republicans.
That’s why I’m adding to my substantial existing risk and backing Clinton again at 1.58. There will doubtless be cover bets on this and my other existing positions. I’ll write another piece soon about strategy going forward but for now its time to be brave, beat the curve and take the wrong odds.
Back Hillary Clinton 100 units @ 1.58
She’s been the overwhelming favourite to succeed Barack Obama since Betfair’s Next President market opened, and is the shortest priced ever at this stage of a US election cycle. She couldn’t have handpicked a more toxic opponent than Donald Trump, and enjoys a massive advantage in terms of campaign organisation. Yet Democrats are getting worried that Hillary Clinton has not sealed the deal yet, and momentum is slowly shifting towards Trump.
Clinton’s poll lead has shrunk since securing a massive bounce following the Democrat Convention, even disappearing altogether in some polls, and the market has moved accordingly. From a peak of 1.26, equivalent to an 79% likelihood, the former First Lady is now out to 1.47 (68%) and her backers are nervously awaiting to see the fallout from a <strong>terrible weekend news cycle.
Her problems clearly pre-date Friday’s comments that half of Trump’s supporters were a ‘basket of deplorables’ – eerily reminiscent of Mitt Romney’s 47 per cent gaffe that was widely assumed to have hurt his 2012 bid. Rather the damage is primarily the result of nearly two years of investigation into her private e-mails and the scrutiny hasn’t stopped yet.
In terms of both opinion polls and sentiment on Betfair markets, the race for the presidency is closing fast. Hillary Clinton remains the strongest favourite at this stage of a US election this century, but a bad couple of weeks has seen her odds drift back to roughly where they were in July, before gaining a big bounce following the Democratic Convention.
The former First Lady is now rated 68% likely to win, at odds of 1.47. Donald Trump has shortened to 3.4, equivalent to a 29% rating. There is still plenty of time for things to change, though, as voters are believed to only begin to take a closer look after Labor Day.
With that benchmark now passed, the media is awash with negative stories about both candidates. The potential remains for either campaign to hit a full-blown crisis should any of them take a turn for the worse, particularly these five.
Will the e-mail scandal derail Clinton with a late bombshell?
Clinton’s improper use of a private e-mail server whilst Secretary of State may be old news but revelations continue to seep out to damaging effect. It is too early to say precisely why her convention bounce has disintegrated but the explanation probably lies here.
As illustrated in previous portfolios, my betting plans are not necessarily based on taking a definitive prediction about the result or, in some cases, even taking much of a risk.
Rather, the game is to set up a position that is predicted to improve on betting markets over time. Even better, hedge multiple markets against one another, therefore taking a ‘wrong’ price. So long as the position is strong at the final count, profit can be secured then by covering the overall portfolio.
Brexit offered the perfect example. My strong view throughout was that it would be very close, therefore making a narrow Remain win excellent trading value. Even if Remain had surrendered favouritism, the odds about a narrow Remain win would have fallen.
The best trade in that portfolio was a loser – when I hedged between two markets to take 11.0 about Remain getting anywhere between 50 and 52.5%. As soon as the early results were declared, it became clear that securing a profit would be easy – backing the side of the line that was in play, either over 52.5 or under 50 (Leave).
I have similar plans for the US election, about which there is a definitive, confident prediction. For at least the seven reasons laid out last month and the past year, Hillary Clinton will win. I have a substantial risk open on a Trump win, which could be closed for profit. I’m not interested.
Without going through all the reasons again, the most striking regards the electoral college. Even if Trump does turn his poor campaign around, even if Clinton is damaged by e-mail revelations, he would still face an almighty task to get 270 electoral college votes.
The latest Realclearpolitics map projects Clinton on 272 – over the line, even before 112 votes in the 9 toss-up states are decided. I challenge any Trump backer to explain how he wins every toss-up, then takes one from the ‘leans Clinton’ box.
But let’s play along. Any route involves Florida, Ohio and North Carolina – which aren’t in the Clinton column yet but where she consistently leads. In each case, Trump is at least 3.0 (33%) on Betfair.
So if you were going to back Trump for the presidency at [4.7], it would make more sense to instead spread the stake three ways at 3.0 in each state. That way, you only need one of them to cover the outlay and he could quite plausibly win all three, yet lose the presidency.
As we get closer, there will be countless combo/hedge opportunities – between Betfair’s electoral college votes market and either state betting or handicap lines. Betfair have a Trump +24.5 line already but liquidity is weak. In time, that will improve and new lines will open up, hopefully with a variety betting firms.
With those later options in mind, Trump is still a great value lay at 4.8. If the electoral college market is a guide, Clinton is about 1.75 (57%) to get 330 electoral college votes. So in theory we could lay the two high bands there as a cover, creating a ‘middle’ of 270 – 329 where both bets win. At current odds, this hedge plan equates to a bet around 4.6 (22%).
In my view that 1.75 will shorten over the next few weeks, so for now I’m just having one side of the bet – laying Trump at 4.8. Eventually I will cover but let’s wait and see what other options become available. It may be that the best cover is just to back a few key states as explained above. If I’m wrong, I can always get out with a loss. It would take a dramatic, sustained swing for Trump to assume favouritism.
Finally lest we forget, as we’re laying Trump rather than backing Clinton or her margin of victory, we would win were Trump to withdraw early. Highly unlikely, but an outcome that I’ve been determined to keep on side from the start!
Updated next president position
Hillary Clinton +112 units
Donald Trump -366 units
From the moment 17 Republican candidates headed by a reality TV star kickstarted the process, the 2016 election cycle has been unique and unpredictable. With fewer than 80 days remaining, markets point to a one-sided contest yet both adjectives still apply.
Betfair punters will be used to the straight-up, binary choice available in the three US elections since our inception in 2001. This time around, as many as five candidates are garnering news coverage.
Whereas the Republican and Democrat nominees accounted for over 98% of the vote in 2004, 2008 and 2012, Hillary Clinton and Donald Trump are averaging only 88% combined in polls. When Gary Johnson and Jill Stein are added to the question, that shrinks to 79%.
In short, a fifth of the US electorate remains unattached to either Trump or Clinton, despite a lifetime in the media spotlight. The latest NBC poll showed Johnson and Stein on 16% combined, despite Americans knowing relatively nothing about them.
Considering both ran in 2012 and won less than 1%, this is a significant breakthrough, with the potential to grow. Were either to reach an average of 15%, they would get into the TV debates. Against two historically unpopular candidates, with the electorate more volatile than ever, that could have a gamechanging effect.
Four years ago, at this stage of the 2012 presidential cycle, there was a stark difference between clear betting market signals and a commentariat loathe to jump off the fence. Whereas pundits were saying en masse that the race was ‘too close to call’, Betfair punters consistently made Barack Obama the odds-on favourite to beat Mitt Romney, progressively so after the conventions.
One of the reasons for that difference was surely an understanding of the electoral system. Each state’s vote translates into a pre-determined number of electors based on population and congressional districts, that count towards the electoral college. In total, there are 538 electors up for grabs, making 270 the winning target. For full, up to the minute projections, check out RealClearPolitics map, based on an aggregate of state polls
As I reported even before the 2012 conventions, the map spelt trouble for Romney, who was trailing pretty much everywhere it mattered. Not a great deal changed between June and November, and Obama ended up winning a landslide with 332 electoral college votes.
While 2012 is a race that Republicans want to forget, they would swap Romney’s post-convention position for that of Donald Trump in an instant. Not only are his national ratings dire but Trump is performing catastrophically in the swing states.
Indeed Hillary Clinton is a much stronger favourite than Obama – the shortest odds of any at this stage since the inception of Betfair – yet on reading the electoral map, is probably a good value bet even at 1.28, which equates to a 78% likelihood. She has already been matched down to 1.85 (54%) to win 360 or more Electoral College Votes – at least 28 more than Obama.
The decision of UK voters to quit the European Union did not just send shockwaves through British politics. The world was watching, seeking to understand what it may signify for their own futures. Indeed, it was widely seen as the latest demonstration of an anti-establishment trend sweeping across the Western world.
In particular, as I’ve found in numerous Stateside interviews, Americans want to know if this reflects a rise in populist nationalism that will lead to the unlikeliest candidate in their history taking the presidency in November.
On at least a superficial level, there are similarities between Brexit and the rise of Donald Trump. Anger towards mass immigration and free trade deals. Distrust of institutions and the mainstream media. The idea that nations have been in decline. Just as the Leave campaign urged Britons to ‘Take Back Control’ of their country, Trump’s slogan is ‘Make America Great Again’.
Brexit also represented a massive shock in betting terms, puncturing the theory that political markets are the ultimate indicator of elections. Leave was given only a 10% chance, trading around 1.1 when polls closed. If a clear correlation between the two votes can be found, 5.0 (20%) about Trump could represent great value.
My view, however, is that punters should be wary of reading too much into Brexit. Rather than ignoring the numerous reasons to oppose Trump, laid out on these pages last week, consider the following five factors.
1) Referendums are fundamentally different from conventional elections
Voters are perfectly capable of distinguishing between a referendum on a profound national question and the party or individual choices on offer at conventional elections. They may very well be angry about immigration and sceptical about free trade, but choosing a government involves countless extra considerations.
The idea that a celebrity, reality TV star could become US President always seemed faintly ridiculous – until Donald Trump defied the commentariat and betting odds to win the Republican nomination.
Betfair punters take a similarly dim view about his general election chances, rating him only 22% likely to beat Hillary Clinton at odds of 4.6 but could everyone be wrong again? My confident conclusion is no, for at least these seven reasons…
1. Republican primary voters are not representative of the wider electorate
While he won 14m primary votes, Trump will need nearly five times as many in November, tapping a very different pool. The type of swing voter that determines national elections always differs from those motivated to turn out in primaries. They are less partisan, hold a more balanced worldview and often only engage the process during the final few weeks.
In this extreme case, they are miles apart. Even in the key states where Trump performed best – Pennsylvania, Michigan, Florida – he is trailing Clinton by big margins. By enthusing a substantial minority with his maverick candidacy, he changed the maths and make up of the GOP electorate, but that does not reflect a wider change in US opinion.
Consider this one simple measure. President Obama usually records an approval rating above 50%. By definition, Trump needs to win some of these voters, despite repeatedly smearing Obama and declaring his era a disaster. Having laughed off Trump’s infamous ‘birther’ theory, Obama is now on the front foot, labelling Trump ‘woefully unprepared’ and calling on Republicans to dump him.
2. A head-to-head with Clinton is far less suitable for Trump than the 17-strong GOP cage fight
Sceptics of my longstanding, confident prediction that Hillary Clinton will beat Donald Trump in November often ask the same question – “He’s got this far despite you all writing him off, so why can’t Trump prove you all wrong again?”.
The question is unarguably valid. Like so many others, I simply couldn’t envisage Trump lasting the distance during the primaries. It was one thing to pose as an outsider, in tune with the Republican base. Quite another to put some meaning to that vague brand, build coherent policies and fight a disciplined, organised campaign.
As it turned out, Trump didn’t need any of the latter substance. By dominating the headlines, Trump made the old political rules redundant, turning the primaries into referenda on him. Even though a large percentage of Republicans were never convinced and less than half supported him, just holding a net favourable position against a crowded field was enough to win most primaries.
By crowding out his rivals and undermining them with smears, Trump prevented them from getting an alternative message across. Ted Cruz ran a textbook campaign, only to be blown away by the cult of celebrity.
Lest we forget, the Cruz plan was to befriend Trump, then sweep up his voters when the celebrity candidate imploded. Yet all they heard was ‘Lyin Ted’, ‘CalculaTed’, the ‘anchor baby’ whose wife worked for Goldman Sachs and whose dad was involved in the JFK assassination.
Subsequently the true outsider, whose policy agenda should be perfectly in tune with angry, revolutionary-minded Trump supporters was booed throughout his convention speech while Heidi was ushered out by security. Substance never came into it. If Trump can destroy Cruz like that – not to mention ‘Little Marco’ and ‘Low-energy Jeb’ – why not ‘Crooked Hillary’?
Here’s why. A General Election is nothing like the primaries. The voters are different, with different values and concerns. The media ask different, harder questions, for longer. The opposition hold absolutely nothing back in attacks. We are seeing signs already that Trump could be utterly destroyed in such an arena.
Remember that the Republican race was unique, and it is unlikely that Trump could have won in any other scenario. 17 candidates meant for the first six months, the only voice gaining traction was Trump.
He was underestimated by his rivals. When Cruz and Rubio should have been attacking Trump, they went after each other – wrongly identifying their principal threat. By the time they finally woke up to Trump’s staying power – just before Super Tuesday – it was too late.
Moreover, the literally endless stream of accusations and potential scandals – from his personal life, past business dealings and bankruptcies, employment of illegal workers, Trump University, failure to publish tax returns, inability to demonstrate claimed charitable donations – all came too thick and fast.
In the infamous Miami debate, Rubio threw one bomb after another, while Cruz effectively scrutinised Trump’s total lack of policy coherence. In response, Trump shouted back as many insults as he received. Only the most dedicated of GOP watcher could possibly have kept up with it all, while the average swing voter in Philadelphia probably turned off in disgust (if they were watching at all).
Nevertheless as I argued at the time, those belated attacks did hurt Trump. He underperformed on Super Tuesday expectations and more or less stalled throughout March. A brokered convention became plausible and #NeverTrump was formed.
Trump, however, shrewdly swerved any more debates and the scrutiny slowed until Wisconsin in early April. There, Trump was exposed during a series of set-piece interviews and duly thrashed in the primary. His response to defeat – attacking Heidi Cruz’s appearance on Twitter – should have been the final warning signal about what his campaign would look like.
However, it was too late to reverse the primary process and the GOP establishment reluctantly endorsed, if not wholly embraced, their presumptive nominee. Perhaps they hoped that Trump was actually playing a smart game during the primaries, and would pivot in order to court his new general election audience.
After three months as the presumptive nominee and a catastrophic fortnight since the convention, it is clear that Trump is incapable of such a pivot. The controversies seem to get worse on a weekly basis – from racist remarks about Judge Curiel to attacking a Gold Star family. Most damagingly, his total lack of foreign policy knowledge is being exposed as questions are asked about Russia, Putin and NATO.
All the other scandals have slipped down the news order, although we can be sure that Democrat attack ads will remind every swing voter in the land ad nauseum. Clinton will vastly outspend Trump in that regard.
On past form, it will push anything negative about Clinton – a flawed, beatable candidate – aside and turn the election into a referendum on Trump. Not a good move when the majority already hold an unfavourable view.
I’m very wary of overstating just how attentive these swing voters have been to date. Normally in elections, the undecideds are less engaged early, tending only to focus on detail when the decision becomes imminent. The signs aren’t good. Trump’s convention speech went down worse than any in history and no neutral observer could deny the last few days have been disastrous.
Far from being on the verge of turning around the polls he describes as ‘phoney’, I suspect Trump is polling near his peak already. The greater the scrutiny, the more serious the campaign becomes, the worse he’ll fare. We are looking at a Clinton landslide.