Friday, December 30, 2011

And now for someone different - a flutter on Rick Santorum

Newt Gingrich still leads the field as measured by the Real Clear Politics poll average for the Republican nomination but he is falling quickly in the polls for Iowa and New Hampshire where voters have begun focusing on who they would like to represent them.
I doubt that he will stay at the front for long after those two states have delivered their verdict.
But, as the fluctuations over the last few months show, Republicans are yet to unite around one candidate. While the markets have Mitt Romney now as a clear cut favourite (and I am feeling quite smug about taking the good price about him) there are likely to be more twists and turns to come before the contest is settled.
Noting that the pollsters have Rick Santorum picking up late support in Iowa I have made a modest investment on him - he's the brown line down near the bottom of the graph - at $27 in the hope that he shortens enough to make crushing worthwhile down the track.
Details of my current portfolio, which is showing a more than adequate 19% return over the last nine weeks, can be found here.

Tuesday, December 27, 2011

Taking a punt on Romney

The Republican candidates are almost at the barrier for their first real race with the Iowa caucus to be held on 3 January with other state selections to follow quickly.
The big change in the markets over the last few weeks has been the bursting of the Newt Gingrich bubble. From being an almost even money favourite in Iowa at the start of the month he has now blown out to be a 9/1 chance.
The prediction markets are putting the probabilities thus:
I have taken 2/1about Mitt Romney winning at the Iowa caucus and the odds on about him winning in New Hampshire.

Sunday, December 25, 2011

Republican nomination: markets and the polls disagree

There is a growing divergence between who the opinion pollsters are recording as the most popular Republican presidential candidate and who the markets are predicting finally will be endorsed.
The Real Clear Politics average of the pollsters' findings puts Newt Gingrich as the popular choice with 27.8% support followed by Mitt Romney on 24.4%.
The Betfair and Intrade markets, however, put Romney as clearly the most likely eventual winner.

Saturday, December 17, 2011

The Gingrich bubble deflating?

The Gallup tracking poll is suggesting that some of the oomph is disappearing from Newt Gingrich's campaign for the Republican nomination.

It makes me fell happier about having laid him and backed Romney!

Thursday, December 15, 2011

Newt fading a little

A few doubts about Newt Gingrich seem to be reaching the betting market at last. Here's a picture of what that excellent oddschecker.com site was showing as the prices offered at 9pm Canberra time tonight by the British books and betting exchanges. The blue shadings show prices that have shortened and pink those that have blown.
A similar drift in the Gingrich price has occurred at Intrade where things are shown in percents rather than as dividends.
The latest trade at 25.5%, compared to 38% a couple of days ago, is near enough equivalent to $3.92. 

Sunday, December 11, 2011

Getting nervous about Julia and Labor

It's been a very short dalliance. My betting affair with Julia Gillard and federal Labor is over.
Two things have influenced me to take a meagre profit.
The first is the message of the last couple of national opinion polls. Newspoll last week and AC Nielsen today. Both showed slight falls for Labor. I had expected visits to Australia by the Queen and President Obama and a little grand touring by Miss Gillard to put the government in better standing than it is.
The second influence is this afternoon's Cabinet reshuffle. I can see no point for some of the changes - like enlarging the Cabinet membership and the promotion of Mark Arbib - as anything other than attempts to prop up support for the Gillard leadership. That she thought such a thing necessary tells me that there is more to those leadership challenge stories than I had assumed.
Hence I have undone my position on who will lead Labor at the next election to make someone other than Julia Gillard into a winner and backed the Coalition to win the election whenever it is held.
Current portfolio details will be updated here shortly.

Monday, December 5, 2011

The speculator's portfolio

We are certainly not bragging yet but so far so good. A modest return since starting in mid-November - in fact a better return that we could hope for over the long haul.
Details of the current bets are here with full details of current and past activities here.

Australian interest rate cut a winner

Well we got one right. We took the odds against ($2.35) back in mid-November about the Reserve Bank cutting the official interest rate by 0.25 percentage points and it has happened. At the jump the price was in to around $1.70 after being even shorter at the end of last week.
Overall the portfolio is chugging along nicely with a notional return since beginning operations on 15 November of 11.6%.
That's too good to be true over the long haul but heck, I'll enjoy it while it's there.

Saturday, December 3, 2011

Maybe I should back British Labour again

I have listened this week to two finance ministers - the Australian Treasurer and the UK Chancellor of the Exchequer - extolling the virtues of fiscal austerity. It seems to be the political orthodoxy in most developed country democracies these days that government spending must be cut to produce budgets that balance.
There is a difference, of course, between the circumstances in the two countries. Australia survived the world financial crisis without slipping into recession and even Wayne Swan's growth expectations revised down in his mid-year economic update show a country still growing. Unemployment might rise in the next 12 months but announced spending cuts are predicted to increase it only marginally.
In the UK Chancellor George Osborne does not have the benefit of booming mining exports to Asia to drag his economy back to healthy growth. His forecasts of the last week suggest that a dip back into recession after a short period of mediocre growth is the likely outcome. Government debt is likely to increase for many years yet despite ever more proposals to limit spending.
The paradox confronting the British is that the more they cut government spending the bigger their deficit becomes and the more they must borrow. Paul Krugman put it succinctly in a recent post on his blog after quoting this from an IMF report: "Short-run fiscal and monetary stimulus is associated with smaller medium-run deviations of output and growth from the precrisis trend."
That is, history says that a financial crisis reduces long-run growth potential if policymakers don’t limit the short-run damage it does.
And yet what’s happening in Britain now is that depressed estimates of long-run potential are being used to justify more austerity, which will depress the economy even further in the short run, leading to further depression of long-run potential, leading to …
It really is just like a medieval doctor bleeding his patient, observing that the patient is getting sicker, not better, and deciding that this calls for even more bleeding.
And the truly awful thing is that Cameron and Osborne are so deeply identified with the austerity doctrine that they can’t change course without effectively destroying themselves politically.
As the Brits would say, brilliant. Just brilliant.
This chart from BofA Merrill Lynch Global Research illustrates the same point as it compares Italy, Ireland, Spain, Portugal and Greece with Germany.
 The case against austerity seems quite compelling to me and already the British public seem to be having some doubts about whether they were right to reject the Labour Government at the election last year. While the ICM/Sunday Telegraph poll today has the Conservatives a couple of points higher than Labour, YouGov’s weekly poll for the Sunday Times has topline figures of CON 35%, LAB 43%, LDEM 9%, Others 13%. 
The UK Polling Report website points that the eight point lead for Labour in the Sunday Times poll compares with YouGov’s daily polling showing an average lead of 4 or 5 points for Labour. The last two polls from Populus (whose methodology is extremely similar to ICM’s) have shown a Labour lead of 8 points, MORI’s last few polls have shown Labour leads between 2-7 points, ComRes’s recent polls have shown Labour leads between 2-4 points, ICM’s last poll also had a 2 point Labour lead. 
All this polling "evidence" makes me wonder why the markets still have the Conservatives favourites to win the next election. Surely there are now many in the Liberal Democrats believing that, with their own support, according to the pollsters, having halved they should leave the governing Coalition.
I am contemplating having more on a Labour victory.

Thursday, December 1, 2011

Changing fortunes of Republican presidential candidates

It pays to remember when betting on elections that opinion polls only indicate to us how people would vote at the time they are asked by the pollsters and that can be quite a different thing to what they actually do when they get around later to casting a real ballot.
Here is what the polls averaged by Real Clear Politics indicated back at the beginning of December in 2007 indicated about the likely Republican presidential candidates:
Click on the graph for a larger image
Rudolph Giulani looked like a shoe-in and the eventual winner John McCain like an also-ran.
Back then I disregarded the polls as a glib New Yorker did not seem to me to fit the mood of conservative Republicans and McCsain turned out a nice winner for me.
This is what the RCP averages are showing at the start of this December:
Click on the graph for a larger image
Mitt Romney has been chugging along near the top while first Perry, then Cain and now Gingrich have pushed their way past him.
That perhaps shows that Romney is not really an ideal choice for most Republicans but I am punting that the Gingrich star will fade in the same way as the other two.

A win's a win - New Zealand election produces a result

There was nothing flash about the price but the favourite duly lobbed in New Zealand with the National Party Prime Minister returned to office in the way a long odds on favourite should be. Elsewhere the punting portfolio is moving along nicely with a profit of over 13% since action began in mid-November. Details of current speculations are here.