🔮The Oracle: Why the Market is Skeptical of Strong Harris Polls
PLUS: Elon goes to war with Brazil • NFL Preview • Ukraine’s surprise strike on Moscow • CD Castellón reveals Oracle sponsorship
Kamala Harris holds a 1.8 point lead nationally over Trump in the RCP polling average, a lead that widened in August. But Polymarket’s odds, set by over $780 million of trading volume, tell a different story: that Trump has rallied modestly to become the 51.4% favorite. Trump is also leading in Nate Silver’s electoral college forecast 55.8% - 44%.
What explains this divergence between the polls and prediction markets? A few theories:
1. State & Electoral College Dynamics
One possible explanation is the popular vote-electoral college split, whereby a Democratic candidate needs to win by about 2 points in the national popular vote to secure enough electoral votes to win.
Recent polling indicates that Harris has a problem with Pennsylvania, the most likely tipping point state (🔮 35%), where Trump has flipped back to being the slight favorite in Polymarket odds.
But the problems could also go beyond Pennsylvania. Mark Halperin reports that the Harris campaign is planning to spend time this week in New Hampshire, Minnesota, and Virginia - all states that should be Harris layups if she was comfortably ahead nationally.
2. Harris struggling with core Democratic constituencies?
Another potential problem for Harris is increasing support for Trump among Black and Latino voters. One market shows it likely that Trump will expand his share of the African American vote in November.
The Teamsters, the fourth-largest US labor union, has also been withholding an endorsement of Harris despite being solidly in the Democratic camp throughout its history. Teamsters president Sean O’Brian spoke at the RNC, but not the DNC. And, while stopping short of endorsing Trump, O’Brian made it clear that an endorsement of Harris was not automatic.
3. Markets discounting a Harris convention bounce
Another possible issue is that probabilistic election forecasts are programmed to expect, and discount, a post-convention bounce in polling for candidates. So even though Harris is leading in the polls, forecasters may be underweighting the current polls, believing them to be a sugar high that will reverse in the coming weeks.
Other Endorsement Markets:
Elon Digs in Against Brazil
Elon Musk’s fight with Brazilian authorities has intensified, with the country now demanding that Musk’s satellite internet service Starlink block X in accordance with Brazil’s ban on the social media service.
For weeks, Musk has defied Brazilian government orders to appoint local representatives in the country and block right-leaning accounts critical of the Lula government. Brazil began filtering X over the weekend under an order that was upheld yesterday by the country’s Supreme Court, and has imposed a fine of $8,900 per day for users found skirting the ban with VPNs.
Why It Matters
Musk supporters frame the controversy as a battle for tech-enabled free speech at a time when it is under threat around the world. They point to France’s arrest of Telegram CEO Pavel Durov, arrests in the UK of pro-Palestinian posters, and controversy over social media censorship of “misinformation” in the US, as parts of this pattern.
The involvement of Starlink implies a growing threat to Musk’s business empire. Starlink has 250,000 customers in Brazil and there are over 21 million X users in the country.
What Markets Say
Markets believe the Brazil ban is likely to continue, but unlikely to spread to other South American countries.
Ukraine Hitting Deeper into Russia Hurts Ceasefire Odds
On August 28 Ukraine launched a multi-drone attack into Moscow that knocked one of Russia’s largest oil refineries offline. The attacks are part of a pattern of deeper incursions into Russia that seem to have blindsided Putin and Ukraine’s western backers.
The day before the attacks, markets assigned only a 15% probability for Ukraine to hit Moscow. Yet on the day of the attack, geopolitical commentator Peter Zeihan noted that deeper strikes into Russia were demonstrating Ukraine’s capability to threaten Moscow.
What Markets Say
The prospects for a Russia-Ukraine ceasefire before October have continued to drop in recent weeks. Some of this is natural time decay, as there are fewer days left before the market expires. But a close look at the Polymarket odds indicate that both the Kursk offensive and the Moscow attacks hurt prospects for a ceasefire.
The demonstrations of Ukraine’s long-range strike capabilities have also increased the odds of a successful attack on the Kerch Bridge, the critical pathway for Russian supplies flowing into Crimea (🔮 20% chance by October).
NFL Opening Week Snapshot
The NFL regular season kicks off on Thursday with the Kansas City Chiefs (🔮 14% odds to win Super Bowl) playing the Baltimore Ravens (🔮 8% to win Super Bowl). Here’s where the odds stand for this week’s hottest games:
Thursday, September 5 🏈 Market
Chiefs: 59% 🏠
Ravens 42%
Friday, September 6 🏈 Market
Eagles: 59%
Packers: 42%
Sunday, September 8 🏈 Markets
Saints: 66%
Panthers: 35% 🏠
Bears: 65% 🏠
Titans 36%
Falcons: 60% 🏠
Steelers: 41%
Dolphins: 61% 🏠
Jaguars: 40%
Lions: 63%
Rams: 38% 🏠
CD Castellón Undefeated Since Revealing Oracle Sponsorship
CD Castellón, the Spanish football club owned by legendary sports bettor and former Dallas Mavericks quant Haralabos Voulgaris, revealed its sponsorship by The Oracle in an X post over the weekend, and went on to win its game against Burgos (2-0) the next day 💪.
Disclaimer
Nothing in The Oracle is financial, investment, legal or any other type of professional advice. Anything provided in any newsletter is for informational purposes only and is not meant to be an endorsement of any type of activity or any particular market or product. Terms of Service on polymarket.com prohibit US persons and persons from certain other jurisdictions from using Polymarket to trade, although data and information is viewable globally.
The biggest problem with the polls is that they are an antiquated statistical technique now characterized by bad data. Who answers a phone call from an unknown number and then is willing to give 10 minutes on their political preferences? Not many people that I know.
All of the polls claim to "weight" their data to come up with something that is closer to the national demographic. A hapless Gen Z person who happens to answer a pollster call may have his opinion weighted by a large multiple compared to a senior in Florida. And, with relatively small sample sizes relative to the voting population, this is a recipe for bad data. I suspect that the weightings, rather than the data samples, are most important in what is ultimately reported; in which case there is a high level of bias in what is claimed to be an objective statistical exercise.
Hence the advantage of a market-based approach like Polymarket. What would Eugene Fama with the efficient market hypothesis advise? Or even the mathematician William Galt at the turn of the last century with his exercise in determining the weight of the bull at the county fair?