An interesting dichotomy has risen in the last week of the US election season. While the polls have continued to show an ever-tighter race, the betting markets took a hard turn away from Trump and toward Harris, with some prediction markets now even giving Harris better odds of winning than Trump.
While global markets continue to gun for Trump 2.0, betting odds display an interesting alternative. Vice President Kamala Harris’ star-studded presidential campaign has ushered in a sudden influx of “smarter money,” causing the betting market to work in her favor. John Hardy, chief macro strategist at Saxo Bank, weighs in on the growing trend. In the report, Hardy reminds us that “the betting odds were suspect in the first place, as several accounts placed identical and very large pro-Trump bets.”
According to Hardy, the smarter money in the market is likely to signal a trend beyond the polls. “We’re all supposed to believe that the closer the popular vote, the easier it is for Trump to win because of the Electoral College system. So that smart money must know something else: could it be signs that Harris has a much better chance of victory in this election?”
How could Harris win and by a stronger margin than most polls predict?
Contrary to poll data, the recent turn of events in the betting market points toward a Harris win, and by a sizeable margin. Hardy believes miscounting of votes is at play in 2024 as well. “After the polls got things so wrong in 2016 and 2020, I have more closely followed discussions among the more insightful and well-connected political commentators and polling researchers on what they are seeing on the ground,” said Hardy.
Hardy reiterates that “pollsters can’t get an accurate reading of what kinds of voters will ultimately be the most motivated to get out and vote.” Based on current poll data, women will be the deciding difference in the 2024 presidential elections. “Polling shows that voting differences by gender are the largest ever measured, with women favoring Harris and men favoring Trump. Recent election shows that women are far more likely to vote than men, especially among younger voters,” Hardy explained in the report.
A Harris presidency is likely to be the result of female participation, “although the odds of the Democrats taking the Senate and, therefore, winning a “Democratic sweep” are still probably low unless the polls are badly off-base,” read the report. Vice President Harris has tactfully left out key details on her economic plan while emphasizing her commitment to social concerns such as reproductive rights and healthcare.
However, Hardy warns that a Harris presidency with a “divided Congress is the most “low-energy” outcome for financial markets, as it brings the least potential for big policy moves.”
