Where things are

Joe Biden holds a commanding lead. It’s not inconceivable that it will fade nor is it impossible that Trump can win. But if the election were held tomorrow Joe Biden would win in an utter rout with Trump defeats in IA, TX, and GA quite plausible if not probable. Joe winning with 400 electoral votes would be a real possibility. Hell, there was a (completely trash) poll out of Arkansas today with Joe trailing Trump by only two points with a 45% share of the electorate (the AR market hit 13c for Dems at one point today, lol).

RCP has Joe up by over 8 points, and with an impressive 49.8% of the national electorate (Clinton was up by 5-6 at this point in 2016 with a 44% share – she would peak post-primary in RCP at 7.9% and 47% share in mid-August; her highest share would be 49% shortly after Access Hollywood). While we wait for Nate Silver to release 538’s official average (soon, apparently), I’ve constructed a simple polling average of all unique polls from the past two weeks from their expertly-maintained database: Joe is up by 8.4 with a 49.4% share while Trump’s share which was in the 43s pre-corona is now mired in the 40s and 41s and sliding further recently.

Where things are going – short term

Despite Joe’s commanding lead and most modelers having him 70-80% to win in November (I price Joe at 71c), the big markets are reluctant to go that far. We’ve drifted from 50/50 to 57/43 before running into some more Trump demand or reluctance to push further. There are a couple reasons for this: there is a widespread perception that “the polls” were wrong in 2016 (they were, on the whole, very good with the notable exception of those that didn’t weight be education in the upper midwest); and there’s the sense that the recent slate of big Joe polls are only so big because of the events they’ve coincided with. Once nationwide protests fade, or the virus does, or the news cycle changes as it has in the past, so too should Joe’s lead shrink. So why buy in now if he might be cheaper later?

I don’t entirely disagree with this line of thinking; in general you make more money walking with the herd of brain-dead zombies than fighting them and sitting on underwater shares for months. But there are big problems here nonetheless worth mentioning:

(1) Joe is worth more than 58c right now even if he were leading by “only” 6 points – he’s probably not worth less until his lead falls below 4 points;

(2) There won’t be that many polls in the back half of June because so many pollsters went hard in early June and early July will also likely be dry with the holiday so people hoping for a quick Trump flip might be waiting for a bit;

(3) If we’re coming into August and convention season with Joe +6.5, he will likely be in the 60s even after factoring in MAGA zombie stupidity;

(4) There are other places where you might want to make this short term play like IA, OH, and TX where the bettors are much more aggressive for Biden than they are in the overall market – after all, Joe is probably losing these states if he’s +5-6 nationally and even the diehards know it.

Even with mean reversion in the polls, Trump faces an uphill struggle

His success in 2016 was rooted in many things ranging from the late October Comey revelations to macro trends in manufacturing to an ability to exploit racism to Hillary Clinton being an utterly reviled figure on the right (and not particularly loved by the left). So while it certainly came as a shock that he did win, it’s worth noting that he only eked it out.

What factors could play to his advantage now?

“Trump has barely gone negative on Joe, the polls will move as his campaign spends money nuking Joe over China.” Joe is not Hillary, nor will any attempt to “define” him make him Hillary. Trump will try, but will not succeed to the degree he did in 2016.

“Maybe the economy will rebound sharply, and voters will be sensitive to the first derivative.” Or maybe it won’t? Or maybe they won’t? Or maybe this whole line of reasoning is desperately speculative what-iffery until we actually see how the polls move?

“Polling error still exists; many polls are still not weighting by education and its probable the national popular vote – electoral college gap has grown. Trump need only be within 3-4 points to be win. He could even win down 5.” This is somewhat true. He certainly is at least 50/50 for any election where he’s only down two points, for instance. But he has to get to that point, which means he’s gotta start polling around 45-47% share and he’s not shown the ability to stay at that range yet. It’s also worth pointing out here that Clinton’s pop vote advantage owed in significant part to the distribution of hispanic voters in CA/TX/etc and that Joe is not doing as well as she did with these voters, despite being up 8 nationally.

“White people voted for Trump at least in part because of a fear of replacement by brown and Black communities and a perceived loss of status associated therewith. This hasn’t changed.” Yes. I agree that this is probably Trump’s best and only play down the stretch. It’ll be back to “caravans” and “thugs” and “The Snake” and other such simple plays to racism. It’s his most potent weapon and it’s where his mind goes naturally anyway.

The virus isn’t going away either

I wrote in early April:

The United States will fail to develop a testing/tracing program needed to contain the virus by the end of May.  The curve will bend, but new cases will continue throughout the summer.  Because the virus spread so readily and from asymptomatic or minimally symptomatic people, our testing regime will only catch cases that make it to the doctor’s office.  Even if we implemented extremely widespread testing, it won’t stop the virus.

And this isn’t too far off the mark. Our testing is quite a bit better now, but tracing lags far behind in most places. And there is no national strategy past “idk, everyone figure it out for yourself”.

Despite the persistence of the virus, quarantine fatigue has set in, coinciding with reopenings, mass protests, and a cultural reticence among places that were relatively spared initially to adopt practices like mask-wearing. As a result, hospitalizations and cases are rising throughout the South and West (increased deaths will follow in a few weeks). If any of these states start seeing big numbers (>10k cases per day, >250 deaths per day), Trump is due for another poor spell of virus news. (Someone will get the virus at one of his rallies at some point too; the media is absolutely champing at the bit to trample him on this story).

So this is going to be a boring blowout election then?

Yeah, probably. Stuff can and will happen. I’d be mildly surprised if we didn’t have at least one period of panic over Joe trailing Trump in polls or something (I’m penciling in early September, immediately post-RNC, for one likely time point. There will probably be a bit of hand-wringing before the first debate as well). Joe could get the virus (he’s not having people he meets with tested), in which case there will be utter pandemonium in the markets. So could Trump, if someone’s cough at one of his indoor rallies finds the perfect air circulation pattern. Maybe someone will figure out why Trump was spirited away to Walter Reed last fall, or maybe Joe will suffer a health scare like Hillary’s pneumonia. Given major shifts to vote-by-mail in the fall and the virus, perhaps the entire election itself will become a legal clusterfuck.

But given what we know about the race right now, our strong Bayesian prior has to be that despite the coming ups and downs, Joe is a favorite to beat Trump, and that a Joe blowout is just as if not more likely than a Trump win.