by Jon Schweppe
Last week, The National Pulse started a new feature where I take a look at the betting markets over at PredictIt and examine the best opportunities for investment each week. If you’re not sure what PredictIt is, be sure to check out this primer about PredictIt and betting markets in general.
I made two predictions in the first edition of this column:
I think it’s safe to call the LOCK. The price for NO shares on the Better Care Reconciliation Act passing before July 31st has now reached 98 cents after Senate Majority Leader Mitch McConnell announced he would be pulling the plug on the bill. The votes simply weren’t there to get it done.
The VALUE PLAY — Justice Clarence Thomas being the next Justice to leave the Supreme Court — will remain up in the air for quite some time, as no one expects any Supreme Court retirement news any time soon. We will revisit the contract if anything changes, but it’s worth emphasizing that 13 cents (!) is a bargain basement price.
Now let’s move on to this week’s PredictIt plays.
When one invests in the stock market, it is wise to make decisions with one’s brain, not one’s heart. Prediction markets are no different. Yet this particular market seems incredibly out-of-whack, presumably driven mostly by conspiracy theorists and members of the #NeverTrump resistance.
Right now, the price for NO shares on “Will Donald Trump be president at year-end 2017?” is 15 cents. The price for NO shares on “Will Donald Trump be president at year-end 2018?” is even more ridiculous: 31 cents!
Let’s consider what would actually have to happen to make this contract come up NO:
1.) President Trump is impeached by a Republican House and convicted with a two-thirds majority by a Republican Senate.
Let’s assume that if Democrats get majorities in the House or Senate in the 2018 midterms — unlikely, as we’ll explore later — their first act would be to immediately impeach the President. Fine. But Democrats wouldn’t take control of either chamber until January 2019, which would be irrelevant to these PredictIt contracts. Under the current landscape, Republicans control the House and have a 52-48 edge in the Senate throughout the rest of 2018.
As much as the Russia controversy might feel like death by a thousand cuts for Trump, rank-and-file Republicans don’t really care. According to a recent Monmouth poll, despite a low approval rating among all voters, Trump has a 79 percent approval rating among Republicans. In the same poll, just 12 percent of Republicans supported impeachment for Trump. The Republican Party would be committing electoral suicide by betraying their base in such a way.
Again, even if the Democrats took control of the House and Senate in a wave election, they wouldn’t control whether impeachment proceedings took place until January 2019. Both of these contracts would resolve to YES. Impeachment should be seen as a non-factor.
2.) President Trump resigns in disgrace.
I imagine this is a factor for some PredictIt predictors, but have you paid attention at all over the last two years? Trump isn’t exactly the “resign in disgrace” type of guy. Do you really think the guy who has never apologized for a word he’s said will suddenly go on national television, apologize for whatever he’s supposed to apologize for, and step aside for Mike Pence? Please. You’re better than this, PredictIt predictors. Trump isn’t resigning.
3.) President Trump’s health fails.
If you’re betting on Trump leaving office in the next two years, this is essentially what you’re banking on. Impeachment is a non-starter. Resignation is unlikely. So is there something wrong with Trump’s health that justifies the price of these contracts? Nope. There is no substantive evidence to suggest his health is at risk. And in typical Trumpian fashion, his doctor declared his health to be “extraordinary” back in 2015:
If elected, Mr. Trump, I can state unequivocally, will be the healthiest individual ever elected to the presidency.
Apologies to #TheResistance, but President Trump is going to be here for not one, not two, not three, but four years, and then maybe even four more if the Democrats don’t get their act together. If you don’t mind waiting until year-end 2017 and 2018, buy YES contracts at 86 cents and 70 cents, respectively. Both of these contracts are LOCKS, and the 2018 contract in particular is an amazing VALUE PLAY.
The 2018 Senate field is pretty juicy for Republicans. Of the 33 Senate seats up for election in 2018, just eight are currently held by Republicans, while 23 are held by Democrats and two are held by independents who caucus with the Democrats. Furthermore, just two (maybe three, if you count Alabama) of those Republican seats are truly in danger, while more than a dozen Democrats are at risk.
The Republicans currently control the Senate 52-48. To win the Senate, because Vice President Mike Pence breaks a 50-50 tie, Democrats would need to net three seats. Here’s their slim path to victory:
The Democrats have no room for error, as the other six incumbent Republican Senators are in safe seats in deep red states. In the dream scenario described above — which, I’m sorry, is a virtual impossibility in even the rosiest of scenarios because Alabama isn’t going to vote for a Democrat — the Democrats would still have to be a perfect 16 for 16 in their most vulnerable seats.
Even if a total black swan event happened — say Sen. Susan Collins (R-Maine) disavowed the Republican Party and decided to caucus with the Democrats — the Democrats would still have to win 15 of those races, 10 of which are in states that voted for Trump.
Good luck with that. This is a LOCK. Buy YES shares at 84 cents.