March 30, 2004

INTERESTING BIT from the IOWA ELECTRONIC MARKETS: The graphic at the right is a crop from their graph showing Kerry vs. Bush since February 1st of this year (follow the link and scroll down for the whole thing). Despite the general sense that it’s been a rough period for Bush, his lead over Kerry has grown steadily since about the time it looked as if Kerry was going to get the nomination.

I think that IEM is generally more accurate than snapshot polls, but this is interesting to me — despite my deep skepticism regarding Kerry, it doesn’t seem to me that it’s been an especially good month for Bush. What information are the market participants taking into account that the conventional widom is missing?

UPDATE: Jim Miller notes that he predicted this. And another reader observes that despite the short-term damage inflicted by the 9/11 Commission hearings, they have ensured that this election will be about the war and terrorism, which benefits Bush. Could be.

ANOTHER UPDATE: The other possibility is that things haven’t been as bad for Bush as media reportage makes them sound.

I wonder if the Richard Clarke affair is Martha Burk all over again? (Via NBL).

YET ANOTHER UPDATE: This makes sense:

I think we’re seeing a difference in focus rather than information. The futures markets focus on the eventual outcome, while day to day jostling drives the conventional wisdom.

If we accept the Feiler Faster Thesis, frequent reversals of fortune are par for the course these days, which means that any one setback is largely irrelevant. Barring an unlikely knockout punch (e.g. the Dean scream), this back-and-forth will continue right up to election day.

The markets have taken that into account, and they’re discounting the tactical advances and setbacks as largely irrelevant. Unless a clear longer term trend emerges, they’ll continue to reflect the underlying economic reality (pretty good, actually) and projections for the situation in Iraq (which I for one expect to be a lot calmer 6 months from now).

Sounds right. We’ll see.

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