How Andrew Yang is doing so far on the nomination trail

What paths are available to Yang to win the nomination?

Mr. Yang is in the nomination campaign stage where he is trying to win delegates to the Democratic national convention.  As a little-known candidate, Mr. Yang will need a spring board into the national spotlight, similar to the tact that Jimmy Carter applied in 1976, by winning one of the early primaries or caucuses: Iowa, New Hampshire, Nevada, or South Carolina.   Waiting until Super Tuesday in March will be too late because along with the spring board of the early caucus or primary wins comes the financial support that is in search of a winner.

It is all about the delegates.

What is Mr. Yang’s game plan in Iowa, New Hampshire, Nevada, or South Carolina?

Mr. Yang’s primary and caucus focus appears to be Iowa and New Hampshire.  Since March 2018, Mr. Yang has visited Iowa at least 29 times and New Hampshire 34 times.  He is following the standard playbook as inspired by Jimmy Carter during the 1976 election where an early win in Iowa and New Hampshire propelled the unknown former Georgia governor into the national consciousness and later the Oval Office.

What should be of concern to traders and investors in the political markets is Mr. Yang’s relative non-appearance in South Carolina.  To date, Mr. Yang has been to South Carolina three times since March 2018.  South Carolina is an important state because of its large bloc of African American voters.  In addition, South Carolina gets to set the tone for the subsequent Super Tuesday primaries. It appears that, for whatever resource constraint, at least at this point on the nomination campaign, Mr. Yang is delaying efforts to secure a large bloc of voters in South Carolina for a distribution of delegates in two smaller states.

Is Mr. Yang discussing policies that resonate with voters?

Mr. Yang has made universal basic income a centerpiece of his economic policy.  For example, he has established an Iowa Freedom Dividend which provides an Iowan in need with $1,000 a month.  The rationale behind the Dividend is to demonstrate how cash transfers can make an economic difference to voters under financial stress; where their value may be reduced to zero as a result of a hardship.

Mr. Yang argues further in support for his freedom dividend that just as Alaskans receive dividends from oil drilling proceeds, Americans can receive dividends from tech firms that drill for information

While Mr. Yang has only been in South Carolina so few times, he believes, as he relayed in an interview to the staff of The Root, that his universal basic income plan or freedom dividend, would go toward resolving certain issues impacting blacks specifically.

 

While Mr. Yang gets more into the weeds with his policy proposals, he still has to battle the name recognition of front runners such as Joe Biden, Elizabeth Warren, and Bernie Sanders.  I am not ready to say that he cannot make further head way against elected officials with name recognition. The political prediction markets have him ahead of Senators Cory Booker and Kamala Harris, and a share on a “yes” vote for Mr. Yang is only two pennies shy of that of South Bend, Indiana mayor Pete Buttigieg.  This tells me that either Mr. Yang’s sales pitch is as potent as the next candidate or that the tech entrepreneur is exercising internet savvy in getting his narrative out to voters.

As of 8:01 pm EST this evening, PredictIt has a “yes” vote for Mr. Yang selling at $.12.

 

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Biden’s remarks about civility won’t impact electability much

Joe Biden took a hit in the political prediction markets today as the media reported on comments he made regarding his ability to work with two segregationist senators, the late Herman Talmadge and the late James Eastland.  Two Democratic candidates, U.S. Senator Cory Booker and New York City mayor Bill de Blasio, took issue with Mr. Biden’s use as an example of civility episodes of working with the late senators, citing the negative impact segregation and racism have had on black people in general and their families in particular.

With the Democratic debates just seven days away, Mr. Biden will have this weekend’s Sunday talk shows through which his political strategists can turn the negative reaction into a positive.  I expect Mr. Biden to make a clearer and more forceful argument that the experience of having to work with segregationists within his own party has prepared him for working with conservatives across the aisle.

Ironically, the only candidates getting any type of bump in the prediction markets have been Pete Buttigieg, Elizabeth Warren, and Andrew Yang.  None of these Democratic candidates were vocally critical of Mr. Biden’s comments.  Messrs Booker and de Blasio saw no changes in their paths to the White House.

Quality information: How the political prediction markets serve the political markets

Corporate investors and the political markets …

A corporate investor in the political markets goes long because, unlike a trader who is more short term minded and willing to get out of a contract before an event in the political markets occurs, the corporate investor has “skin in the game” by way of future profits and losses.

In the political markets, where an office seeker sells a narrative to the electorate in exchange for a vote, a corporation is concerned that the office seeker with a message or policy that puts the corporation at a disadvantage may win an election.  Therefore, the corporation will invest in the office seeker, whose policy proposals provide the corporation with a benefit, by financing the most effective ways for promoting the favored office seeker’s messaging.

The corporation’s uncertainty as to which office seeker to back and how well that office seeker will perform in the political markets hinges on the quality of information the corporation receives from the political markets.  The information from the political markets will be skewed, tainted, biased.  The office seeker may relay to the corporation that things are going well on the campaign trail; that town halls are packed; that the electorate is buying the message.  In reality, the office seeker may not have enough volunteer staff in key voting communities; town halls have been cancelled or poorly attended; and the office seeker’s message may not be resonating with voters.  For these reasons, a corporation may rely on the political prediction markets to close the information gap.

The accuracy of information is enhanced in the political prediction markets because the parties trading in these markets have “skin in the game” by purchasing one of two sides of an event contact, i.e. will office seeker A win or will she lose.  Traders are putting their money where their mouths are and to ensure maximum returns on their trade, traders seek out and incorporate the best information they can find regarding potential outcomes.

This information in general is about how an office seeker is increasing her value in the political markets.  For example, what are the messages being pushed by the office seeker? How relevant are these messages? How is the office seeker expending resources? Does the office seeker have an abundance of resources?  Where the answers are positive as to value of the messaging, then the possibility of a favorable event as determined in the prediction markets is also positive.

Conclusion: Both markets compliment each other …

Information is the currency that ties the political markets and the political prediction markets together.  Political prediction markets provide the means for cutting through the noise in two ways.  First, the corporate investor uses information from the political prediction markets to filter out less accurate information.  Second, actual traders in the political prediction markets are seeking out the best information possible and this higher quality information is observed by the corporate investor in the form of prices for each trade in the prediction markets.

It is all about the information…..