peaking? September 17, 2008

The economy being the headline is not good news for the McCain campaign.  You can see McCain reaching, groping for something, anything.  And you can see Palin flailing with no answer.  McCain’s “fundamentals are strong” comment was probably one of his biggest stumbles of late and unfortunately for him, his long Senate record on addressing these issues does not support his recently tougher talk. 

My guess is that the carnage is not over on Wall Street, and that there will be a direct correlation between McCain’s polling numbers and the financial sheet news.  ARG has a slew of new numbers out today.  Unfortunately they are delayed, so while the post date is Sept 17th the sample date is generally in the Sept 10-13 window.  This means that McCain’s 2-point lead in Colorado, for instance, is suspect because it samples before the recent visits by Obama and Palin.

Interestingly, the ARG numbers have a tighter race in Montana than I would have expected.  McCain has only a 2-point lead in MT and the survey questions ignore the fact that both Ron Paul and Bob Barr will be on the ballot there, and that there are a slew of good statewide D candidates running, including the popular D governor Brian Schweitzer.  MT is not a pivotal state in terms of Electoral College votes by itself, but it could add with another smaller state to become so for Obama (because McCain is expected to win there).  That state could be West Virginia, where McCain’s lead is also surprisingly small in the ARG survey.

As far as Colorado, if McCain’s 2-point edge was accurate as of Sept 10-13, that’s where he will peak.  I think McCain will not open a bigger lead on Obama here and I expect that if Obama can come to CO a few more times, especially to the western slope, he will win this state.  Of course, Obama must talk about western issues.  He must come out strongly pro-hunting and recreation without looking like John Kerry pandering.  He must press on clean energy issues without alienating those that make their money on oil and gas development here.  And he must realize that westerners want to be given a reason to vote for him.

Looking forward to Tuesday February 29, 2008

On the D side there are 370 delegates at stake between Texas (193), Ohio (141), Rhode Island (21), and Vermont (15). Ohio is currently the hardest outcome to predict. Signs are still pointing to a small Clinton win, but volatility in both the prediction markets (high) and the polls (less, but still present) makes the outlook murky. With at least 12 polls by 10 different pollsters in the past few days, most giving a 5-10 point lead to Hil, her lead seems safe. However, some things to consider:

• Repeat polls by SurveyUSA (solid track record) and Rasmussen (not so much) both show a 10-point Clinton lead falling to five points a few days later (both most recently taken on the 25th).

• No pollster has surveyed more than 862 “likely voters” and most are at n=600. At most, only about 0.01% of registered voters are being sampled. That would scare any rational statistician. Political pollsters get irrational quickly.

• The difference between the final outcome and the polls depends on whether any voting groups are being systematically underpolled.

For the most part, Obama’s tally margins over the polls have been greater than Clinton’s. In other words, if you look back at every state that has voted so far and compare final outcome with final polling averages, often the match was good (within a couple percent), but when it wasn’t, it was much more likely to underestimate Obama’s percentage and overestimate Clinton’s. This effect was particularly big in Georgia (Obama polled at 14 and won by 35), Wisconsin (Obama polled at 7 and won by 17), Tennessee (Clinton polled at 22 and won by 13), Alabama (polls tied and Obama won by 14), and to a lesser extent Oklahoma (Clinton polled with a 29-point lead and won by 24), even New York (Clinton polled at 20 and won by 17) and other states. Some states were right on (NJ, CT) and only one reversed the effect (in California Hillary polled by 6 and won by 9).

market volatility February 27, 2008

Of course soon after I made this comment in the previous post

To predict a margin of victory, the best strategy is to subjectively combine market trends and poll trends. Doing that, my current guess (subject to change) is that Hillary will win Ohio by somewhere in the 3-6 range and Obama will win Texas by close to ten.

wouldn’t you know it but the Intrade market got all volatile on us. Where Ohio trading had been mostly steady for a week, the market for the Ohio Dem primary is currently trading at $52 for Obama and $44 for Clinton. Go figure. I’ve been telling people privately for the past few days that I think Barack will win Ohio, but I’ve also let myself be swayed by the stability in the Ohio polls and markets that have been showing a decent Clinton lead. In aggregate the Ohio polls are still showing a ~5 point Clinton lead but are also still showing a stronger upward trend to Obama.

Two things important to keep in mind about the polls and markets: first, the polls are a lot slower than the markets. The polls lag true public opinion by a few days, and the significance of that cannot be overstated in this primary season, where public opinion has been quite volatile. But it’s also important to keep in mind that the individuals making trades in the markets and thus setting the market prices are not doing so independently of the polls, but are using the polls as informational inputs in their decision making. So that said, how to interpret a sudden market swing to Obama today when not a single poll has come out giving him a lead? The answer is mood. Mood amongst the traders has shifted, likely as a result of last night’s debate, and is feeling an Obama win in Ohio in spite of what the polls say.

market watching 27-feb February 27, 2008

In previous reports I’ve talked about watching the prediction markets vs. watching the polls (I mostly watch intrade). I often consider the markets to be better predictors of outcome, unless the pollster in question has a good track record and is using a decent-sized sample. If you do trust the markets (they’re not always right, though), right now you’d give best odds to Barack crushing Hillary in Texas and Hillary winning narrowly in Ohio. The trading trends have been steadily up for Barack in Texas and he’s now trading at 70-30. The markets have been essentially flat in Ohio, with Barack making small cuts into Hillary’s stable ~10 point lead.

However, even though I said “crushing” and “winning narrowly,” what the markets don’t give is a likely margin of victory. They give a probability of a certain candidate winning. The market may be feeling that an Obama win in Texas is almost certain even if it is only by a few points. To predict a margin of victory, the best strategy is to subjectively combine market trends and poll trends. Doing that, my current guess (subject to change) is that Hillary will win Ohio by somewhere in the 3-6 range and Obama will win Texas by close to ten.

Since the media jumped all over it like gnats on Joba Chamberlain, you probably saw that Bill Clinton said the same thing I did a while back: if Hillary doesn’t win both TX and OH then she’s done. (Snark snark, I said it first, Bill. But then again, it was obvious to everybody, wasn’t it?) I’m not clear on what she will do when she loses Texas and wins Ohio. If she loses both she will concede on March 5th, but if she wins Ohio and loses Texas closely I bet she stays in it for a few more days.