With the Republican National Convention fully underway, Donald Trump has seen quite a bounce in the betting markets regarding his chances of winning the November election. In the latest odds from the betting markets, Trump’s odds surpassed 30% for just the second time since he announced his candidacy over a year ago. At a level of 30.1%, his current odds are within one percentage point of his late May high (30.8%), when he all but locked up the nomination.
Oil tycoon Harold Hamm has chalked up the recent rally in equities to what he says is the market’s realization that, if elected, Donald Trump will be more friendly towards business. Whether you agree with his notion or not, there can be a case made that while the performance of equities had been closely tracking the poll numbers of Hillary Clinton, more recently, it has been Trump’s poll numbers that stocks have tracked.
Meanwhile, as the S&P 500 has surged, Clinton’s poll numbers have declined to their lowest level since late May. We have repeatedly highlighted the fact that history shows that equity markets have tended to do better under the administrations of Democratic presidents, but in the short term at least, Trump’s improving poll numbers have had zero impact on equity prices. That lack of a reaction may be due either to the fact that the betting markets have lost a lot of credibility post the 6/23 Brexit vote or that even after the recent shifts in the betting markets, Hillary Clinton’s chances of winning in November are still more than twice that of Donald Trump.