The first, and likely only, debate between former President Donald Trump and Vice President Kamala Harris has concluded, and as with any political showdown, the question immediately arises: who won? The vast majority of experts and pollsters have named Harris as the winner. But will they bet on it? We dig into how prediction markets are allowing people to bet on the next occupant of the White House, and what the markets are telling us about this election. But first…
In the News
Clipping off the Worker’s WingsWith Air Canada pilots on the brink of a strike and lockout, will the federal government step in to avert a strike? Business groups are calling for the Canadian government to intervene immediately, but don’t get your hopes up, write Eric Atkins and Marieke Walsh.
Accumulation of penalties: U.S. regulators have slapped Toronto-Dominion Bank with new fines for providing false financial information about its U.S. customers to consumer credit reporting agencies. While the $28 million fine pales in comparison to the $3 billion in anti-money laundering fines the bank could face, regulators delivered a stern rebuke to the bank.
Bad weather: A severe hailstorm that hit Calgary in August could make this summer the most expensive on record for the insurance industry and trigger premium increases across the country. Insuring costs for weather-related events this summer have reached $3.6 billion, more than the costs for all of 2023.
Happenings today:
- Statistics Canada has released the latest data on consumers’ financial situation, including household debt ratios.
- The agency is also expected to provide an update on the housing construction boom, or lack thereof, in terms of building permits in July.
- Revenues include Adobe, Transat AT and Empire Co.
Republican presidential candidate, former President Donald Trump, and Democratic presidential candidate, Vice President Kamala Harris, participate in the ABC News presidential debate at the National Constitution Center on September 10, 2024 in Philadelphia.Alex Brandon/The Associated Press
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Betting on the Presidential Election
As Harris attacked, provoked and toyed with her rival during Tuesday night’s presidential debate, there was a moment when the ground seemed to give way for Trump. It happened around the 25-minute mark as the two argued over abortion and Trump’s lie that Democrats support the death penalty.
That was the moment people who had been using the online prediction market Polymarket to bet on Trump’s chances of winning the Nov. 5 election almost gave up: Within minutes, Trump’s chances of winning had fallen from 52% to 49%.
What is a prediction market?
Prediction markets are nothing new. The stock market itself is just one big prediction market, where investors bet on the future performance of companies. But with this election, a new wave of prediction markets has come to the fore, allowing people to bet on the outcome of events.
For example, Polymarket is a blockchain-based marketplace where people use cryptocurrency to buy shares to bet on specific outcomes of events like elections. As of Wednesday, a total of $871.9 million had been wagered on election outcomes.
All of this came from outside the U.S., as PolyMarket bans U.S. users. U.S. regulators remain very uneasy about the idea that political betting could undermine confidence in elections, but betting on sports touchdowns is fine.
The election betting odds-tracking website, which aggregates bets from four different forecasting markets, currently gives Harris a 51.3% chance of winning the presidential election, swapping places with Trump from a few days ago.
Are prediction markets better than opinion polls?
The jury is still out on this one: Prediction markets have been accurate in the past two presidential elections, with bettors predicting President Joe Biden’s loss weeks in advance, and supporters are keen to point out that people actually bet money on prediction markets and polls.
Still, prediction markets haven’t been around long enough to prove their effectiveness.
Trump Inc.
Outside of the prediction market, traditional markets were also signaling that Trump had lost the debate. Shares of Trump’s Trump Media & Technology Group, which owns Trump’s own Truth social site, plummeted 14% at the market open on Wednesday and are now down nearly 80% from their March peak.
Think bigger
Okay. But Trump Media is an unusually concentrated stock in which Trump owns a majority stake. What about the stock market as a whole? There is evidence that the market can predict the new president quite accurately.
Last month, Adam Turnquist, chief technical strategist at San Diego financial advisory firm LPL Financial, crunched the numbers on stock-market movements before presidential elections going back to 1928. A pattern emerged: When the S&P 500 index was positive in the three months leading up to Election Day, the incumbent party stayed in power 80% of the time. When the index was negative during those three months, the incumbent party lost eight out of nine times. “Taken together, market movements have predicted 20 of the past 24 elections,” Turnquist wrote.
August 5 was the start of the stock market forecast period for this election. As of now, the S&P 500 is up about 7%, but August 5 comes after several days of panic selling. The index is still down 2% from its all-time high in July.
Swift boats once sunk John Kerry’s presidential campaign. Will they sink Trump?
So what happens when you throw billion-dollar economies and social media giants into a still-close election? Minutes after the debate ended, childfree cat lover Taylor Swift took to Instagram to announce to her 283 million followers that she was endorsing Harris for president, and she made a point of urging her American fans to register to vote.
Swiftonomics is a powerful economic force that has been credited with boosting many countries’ gross domestic products as Swift’s “The Eras Tour” traveled around the world. Now, that momentum is working in Harris’ favor: As of Wednesday morning, more than 300,000 web users had visited Vote.gov via Swift’s URL, the group told The Globe and Mail.
For now, there doesn’t appear to be any prediction markets where people can bet on how Swift will affect the election. Only time will tell.
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Americans got more relief from inflation in August, giving the Federal Reserve another reason to start cutting interest rates next week, but the very real problem remains: rising home prices. The Consumer Price Index rose 2.5% overall, the lowest annual increase since February 2021, but home prices rose again, up 5.2%. If the central bank is looking for an excuse to cut interest rates more slowly, this could be the reason.
Morning Market
Global markets are trending higher, buoyed by optimism over a rate cut by the US Federal Reserve next week and another by the European Central Bank later this morning. Wall Street futures and Toronto Stock Exchange (TSX) futures are pointing higher.
Overseas, the pan-European STOXX 600 rose 0.94% in morning trading. Britain’s FTSE 100 added 0.76%, Germany’s DAX rose 1.13% and France’s CAC 40 added 0.79%.
In Asia, Japan’s Nikkei rose 3.41%, while Hong Kong’s Hang Seng Index added 0.77%.
The Canadian dollar was trading at 73.69 cents to the U.S. dollar.
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