Trump trade is hot.
Shares of Donald Trump’s media company, ticker symbol DJT (DJT), have soared more than 300% since late September. This is a sure sign that traders think Trump will win the presidential election, making the Trump flag-waving Truth Social app an essential destination for everyone orbiting Trumpworld. .
Trump’s other deals are also booming.
Bitcoin (BTC-USD) is near all-time highs after President Trump announced renewed support for cryptocurrencies. Interest rates are rising on expectations that President Trump will cut taxes again, widening the deficit and putting upward pressure on interest rates. Some money advisers are telling clients that President Trump’s plan to cut corporate tax rates will boost profits and stock prices.
If Trump wins, all of that is possible. But there are some signs that Trump could lose, and that investors may be overestimating his chances of winning and making big bets that could break.
In the betting market, President Trump and his Democratic rival, Vice President Kamala Harris, were neck and neck in early October. Since then, the odds of Trump winning have increased, with the RealClearPolitics average showing that Trump has a 63% chance of winning, while Harris only has a 36% chance of winning. It has been. This is Trump’s biggest lead in the betting market since Harris replaced Joe Biden as the top Democratic nominee in July.
Traders appear to be taking cues from President Trump’s rising odds in the betting market. But the betting odds are nothing like the polls showing a dead heat. Betting markets give you a probability of winning, which is different from a slim lead in a poll. Jim Bianco of Bianco Research points out that in the betting market, odds of less than 66% for Trump are considered a toss-up. Trump would only have a clear advantage if his odds in better markets were above 66%, which is not the case.
Analysts at Citi noticed this disparity during a recent conference on international finance in Washington, D.C. “Investors are almost uniformly predicting a Trump victory,” Citi said on October 28. Explained in the analysis of the day. “Meanwhile, political analysts say the race remains very tight and tilted toward Mr. Trump, but close enough to a 50-50 split.”
Read more: What the 2024 campaign means for your wallet: Yahoo Finance’s presidential election guide
The reason for the possible bias against Trump is the inaccuracy of polls. In 2016 and 2020, polls underestimated Trump’s support. His actual number of votes was about 1 to 3 percentage points higher than the poll showed. This year’s polls are tied, and if Trump were to lead by a few percentage points again, he would be the clear winner.
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But pollsters are working to correct these inaccuracies, and this year’s polls may be more or less accurate.
Some polls overestimated Republican strength, including one predicting a “wave election” for Republicans in the 2022 midterm elections, but that did not materialize. Democrats actually topped the polls that year. Of course, Trump is not on the ballot, and his presence in the election will have a bigger impact on polls than support for other candidates, including the 250 or so candidates Trump supported in 2022. There is speculation that it may be distorted.
In the final days of the 2024 campaign, each candidate could benefit from late-mover intangibles that are not evident in polls.
Mr. Trump has so far benefited from “shy Trump supporters” who were reluctant to tell pollsters they intended to vote for him; This was one of the reasons why it was highly evaluated. There may be some Trump supporters who are still shy, especially since this is President Trump’s first election since the Jan. 6, 2021, riot at the Capitol. Some voters, tired of the pro-Trump riots, may still plan to vote for him, even if they don’t want to. Mr. Trump may also benefit from male voters who simply won’t vote for a female presidential candidate.
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Harris also has upside that could prove decisive late in the game.
The upper limit of President Trump’s national vote share is believed to be around 47%. Even if it falls below the national limit, it could still gain electoral votes if it wins in key battleground states. But Trump’s cap could limit his gains even in battleground states.
Are the gambling markets wrong? Republican presidential candidate and former U.S. President Donald Trump says, “Trump will figure it out,” during a press conference at Mar-a-Lago in Palm Beach, Florida, U.S. on October 29, 2024. (Photo: Reuters/ Marco Bello) ·Reuters/Reuters
Ms. Harris has raised more money than Mr. Trump, and by most accounts she is deploying to wage a thorough “ground war” in battleground states, down to the ZIP code and neighborhood level. Campaign field workers can gather critical last-minute votes by knocking on doors, making phone calls and encouraging people to vote in areas where late surges are most needed. By contrast, Trump has outsourced his campaign in Pennsylvania, perhaps the most important battleground state, to billionaire Elon Musk, who has not been involved in any proven, potentially illegal sweepstakes. Not experimenting with tactics.
Harris also addressed the emotional issue of abortion rights in her column as she campaigned to restore some of the freedoms overturned with the support of three of Trump’s Supreme Court nominees. is also covered. This is a very motivating issue for millions of women who are sure to succeed no matter what.
Some election models give Harris a slight advantage. Moody’s Analytics election model, based on economic data and historical trends in battleground states, predicts a narrow victory for Harris, with 302 electoral votes to Trump’s 236. Factors that may be helping Harris include falling gas prices, with the national average now at about $3.13 per gallon, and improving consumer confidence. The main factors that could hurt Harris in this model would be lower-than-expected Democratic turnout or higher Republican turnout.
None of these are arguments that Harris will win. Rather, it’s a warning that the market may be exaggerating the odds of a Trump victory, and that the trade could quickly unwind if Trump loses. If Harris prevails, DJT’s stock price could collapse as interest rates fall quickly and inflation risks are perceived to be lower.
As the saying goes, elections have consequences, and this year those results could include large sums of money bet by speculators.
Rick Newman is a senior columnist at Yahoo Finance. Follow him on X @rickjnewman.
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