The Final Stretch

Hello, it’s October 17 which means there are 17 days until voting ends and Joe Biden very likely wins the election.

The weeks ahead

But enough for now about who is going to win (it’s Biden). Let’s talk about the next two weeks and election day. How are prices going to move between now and Biden 99c? When looking at the returns in Florida on election day, how quickly will you be able to determine that Biden wins by 6 or just 2?

Substantial price movement unlikely until Thursday’s final debate

For all the drama we’ve had since the first debate (remember when Trump might have literally died from COVID?), the overall picture has remained stable, with Biden consolidating gains from Trump’s poor first debate.

More striking than Joe’s consistent (and wide!) national lead is that it comes as fewer voters are undecided or opting for third parties relative to last cycle:

The models, as a result, have Biden at 90%. The markets, by contrast, plod ahead obliviously:

Why? Stupidity. An un-ending stream of MAGA lemmings chasing the high of the 2016 comeback, unaware of or unwilling to comprehend the change in dynamics in this cycle, and lumbering excitedly toward the cliff’s edge as a result. (Volume in the USPREZ market spiked on the first debate on PredictIt from 200k a day to 400k a day and has stayed high until yesterday when the trader limit was reached – now they’re having to venture out to other markets).

And why should this abate? There’s enough stuff floating around (“FiveThirtyEight had Clinton at 87% at this time in 2016 too”, “Hunter’s emails!”,”Biden will get the virus!”,”TargetSmart says Trump is winning the MI early vote!”) to keep MAGA hope alive. The only major scheduled event left is the second and final debate. I expect Trump’s price to remain absurd (and perhaps increase) in anticipation of a “good” debate performance or perhaps simply a “not disastrous” one. Should he deliver, the market reaction could take him near 50c. Should he lose (more likely), I expect rationality will finally start to overtop the levees and Biden’s price will head towards the mid-70s and keep rising until election day.

Election day

The scene: It’s Tuesday, November 3rd. Possibly more than 100 million votes (at minimum 60% of the final nationwide turnout) will have been cast already, and Biden will be leading among these substantially. Knowing the partisan make-up and with some educated guesswork on past vote history and county demographics, we’ll be able to model his lead in many states (see Dave Trotter’s work in FL for one simple such model).

The only thing left is the Final MAGA Hope: big Trump election day turnout. And he’s probably going to get it! I am expecting that if there’s one last dead cat bounce left in Trump’s price, it will be from folks excitedly citing anecdata from Trump county election day turnout.

Morning to 5pm: FL Turnout Watch

This will be particularly true in the one state that matters most of all for early election night: Florida. Unlike many states, Florida provides every-10-minutes updates to its turnout on a county-by-county basis (with a couple exceptions). This is a treasure trove of data (quite useful if you’re playing the ballot market there) for election day.

By the time the 5pm exits roll around, we’ll have a great idea of exactly what turnout in FL is looking like, whether Trump counties are coming in big or just so-so, and (most importantly) what kind of range of margins Trump needs to hit in those counties (among election-day voters) in order to win.

5pm Exits

We won’t know the toplines (well, maybe someone will know someone who knows, but I won’t). But which of the questions they choose to cover in the news and their general tenor (surprised or not surprised?) will be semi-useful tea leaves. After all the whole point of the early exits is to shape news coverage and prime the audience for what’s to come. If they’re talking a lot about how the top priority identified by voters was COVID and so on, it’s good for Biden.

6pm eastern KY and IN

We’ll already have results in Dixville Notch (Biden will win Dixville Notch) from way earlier, but this is when the first real results start to arrive. I’m curious if exits will be released at 6pm (if there are exits in these states) or whether the networks wait until 7pm (parts of both states are in the central time zone). Nonetheless, we’ll get a trickle of results from 6 to 7 from the eastern portions of both, some of which may be interesting. (Note that KY has much more VBM this year and thus initial results may be more D-biased than you’re used to seeing from KY.) I would warn against extrapolating too wildly from anything in appalachia, but if you see some Jefferson/Fayette/Kenton/Boone/Campbell in KY before 7pm they’re probably worth raising an eyebrow at.

7pm KY/IN/VT called, FL/GA/SC/VA close

The action begins. If PredictIt is still operational, we’re in business. KY, IN, and VT are all called. If there’s any hesitation on calling IN, Trump is in big shit and it’s time to eject on your MO/KS Dem NO bets if you want to be cautious. I don’t expect calls in SC or VA, though anything immediate in either is good for Trump (SC) or Biden (VA).

There will however be exits in at least FL/GA* and presumably some of the others, so expect some initial reaction in the markets to those (particularly in the margin markets since that’s where the sharps will have more of their powder kept dry). The exits will be off, of course, but any big signal in them (like if they have Joe winning GA by 4 points or something) will cause tremors everywhere.

*one edit here: we actually might not have FL exits because of the panhandle; those presumably wait until they don’t matter at 8pm.

7-7:15pm initial FL results

The first few counties in FL will report their early vote + VBM, and I expect Trump to be leading off the bat (likely the first few counties will be smaller Trump counties). I don’t expect a tremendous market reaction though it is possible. These are nonetheless important results: probably at least half the votes in these counties (likely higher and perhaps substantially higher) and we should have a good idea of what the vote split there should be based on partisanship and past vote history of those counties. If the numbers are outside my expectations, I’ll certainly be adjusting my positions accordingly.

7:15-7:30pm first big blue FL counties

This is when we start seeing how truly big the early numbers are from places like Hillsborough/Duval/Palm Beach/Dade. Some might not make it in by 7:30 (many may not come until 7:45), but this is about when Biden should take the lead overall in FL. The market may start to call it. (I have no idea where we’ll be in GA by the way, I presume just rurals based on my past GA election experience of waiting until like 9pm to see anything substantial out of Fulton/DeKalb/Cobb/Gwinnett).

7:30-8pm FL/GA and more

OH/NC close (exits to follow) and WV called for Trump.

We’ll have plenty from all over at this point, including most of FL’s early vote (with the always-important exception of the panhandle). Biden could easily be up by 10-15 points or more in FL at this stage which will be a really big gulp for MAGA money. We’ll also have just started to see the first few election-day precincts start to come in, which I’ll be closely watching and which may be definitive (Sumter, for instance, reported 95% of its vote in 2018 in one fell swoop at 7:45pm, at least as recorded by the NYT). GA should also be in full swing, and KY by this point could be nearly half reported with some counties nearing completion which means shifts in counties there will start to become meaningful analytically.

In 2016, Clinton hit 95c shortly after 8pm on her lead in FL and lead in early OH votes. The markets will of course remember that (to some extent) and that over-exuberance occurred in an environment in which she was expected to win (sentiment is more mixed now), but I still struggle to see the markets containing themselves when they’re staring at blue in three and possibly four key swing states (FL, OH, NC, GA). Whether I’m selling this peak, holding through it, or buying the dip back the other way depends on the numbers and whether it seems like PredictIt is about to crash or not.

8pm onwards

I’ll leave the rest of the night and the days and weeks to come as an exercise for the reader.

What if I’m just wrong and Trump wins

I really hope there are some readers of this blog that are rooting for Trump with the giddy anticipation of not just seeing their guy win, but also seeing know-it-all betting types like myself get served another stinging dose of comeuppance. What would it take? A fairly big polling miss (or for The Tightening to finally show up and stick). Huge election-day turnout. Softer than expected early vote margins. Maybe Joe gets the virus in the next couple weeks (anything can happen). It’s conceivable but it’s just not all that likely folks.

Good luck out there, and I hope to see you all enter my final contest when it launches in a week 🙂

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