It’s around 11:26 in the morning in Tokyo. Good morning. I am wishing Sydney an early good afternoon. It’s about 1:26 pm on your side of the world. Other than the Dallas Cowboys getting spanked by the San Francisco 49ers, there is nothing major to report.
Wait a minute. There is an election to choose the President of the United States on 5 November. According to polling data from RealClearPolitics, Vice-President Kamala Harris is in a tie with former U.S. president Donald Trump. Mr. Trump is polling at 48.5% of likely voters choosing him on the popular ballot while Ms. Harris is polling at 48.4%. It does not get any tighter …
… unless you figure in RealClearPolitics betting markets which have the probability of Mr. Trump winning the popular vote at .611 while the probability of a Harris victory is at .371.
If I use my back-of-the-napkin methodology for calculating the probability of a Trump win, I would put it at .50. He has the record of running twice and winning once. And right now, the probability of a win by Ms. Harris is undefined since she has never won a national election at the top of the ticket much less her party’s primaries.
Like any popular election it will be the intangibles that make a difference. Just watch C-SPAN‘s Washington Journal any morning between 7:00 am and 10:00 am Eastern time and you will get a good idea on what those intangibles are.
For Mr. Trump, those intangibles range from his boorish braggadocio; to his comments about immigrants from Haiti and Mexico; to the name calling of his opponents; to his business bankruptcies, and to criminal and civil cases against him.
For Ms. Harris, the intangibles range from her reputation for running off staffers from her vice-president office, at least in the early days; to claims that she does not do her homework; to her aforementioned poor primary performance showing or lack thereof; and to her “Marxist” policies as evidenced by her intent to raise taxes on billionaires, provide first time home buyers with loan assistance of up to $25,000, and increases in elder care and child care credit.
Swaying voters requires puffery and marketing (something Mr. Trump excels at) in order to buy votes and the markets appear to accept that, at least from my reading of the AUD/USD and the USD/JPY. Along with the DXY, the dollar has been rising over the past week. Around 2:44 pm EST, on 21 October, the AUD/USD was at 0.6658, according to data from x-rates.com. The USD/JPY had a print of 150.7530 at the same time, while the DXY registered at 103.97.
As of 11:02 pm EST, the AUD/USD registered at 0.6598 while the USD/JPY registered at 153.6549. The DXY is at 104.51. There are other factors that could cause dollar strengthening including interest differentials and relatively poorer economic performance in Australia and Japan relative to behavior in the U.S. Maybe a few traders on bank or central bank trading desks got a whiff of information we mere mortals will never smell, including insights on this Friday’s non-farm payrolls report.
A good report may help Ms. Harris’ campaign, but we can chop that up on another post.
Alton Drew
27 October 2024
Lawyers Write the Bets. Bankers Sell the Bets. 