Following yesterday’s medical episode involving Hillary Clinton in New York City and the subsequent disclosure that she is dealing with pneumonia, the betting markets saw large moves with respect to the odds of each party winning the election in November.  As shown in the first chart below, the odds for Mrs. Clinton to win (which were already well off their peak levels following the DNC Convention) are now down to 61.5.  At that level, the odds for the Democratic candidate to win in November are down nearly 17 percentage points from their highs and at their lowest levels since late February.

dem-odds-091216

While the odds for Mrs. Clinton and the Democratic Party have declined, the odds for Donald Trump to win have been on the rise.  As shown in the chart below, the odds for Mr. Trump are back above 30% and near their highest levels of his candidacy.  Mr. Trump’s odds reached similar levels back in late May and July before falling back down again, so it will be interesting to see if he can maintain his momentum this time around, or whether his odds will once again dip.  Only time will tell.

trump-odds-091216

Whatever your views are towards the two candidates or how each of them will impact financial markets, the reality is that for the last several months, Mrs. Clinton and the Democratic Party have been the odds on favorites to win in November.  If Mr. Trump’s odds prove to be more than temporary and continue to increase as they have in the last few weeks, it will mark a major shift in the prevailing trend that we have seen since Mr. Trump became the odds-on favorite on the Republican side.  Good or bad, that is likely to impact financial markets, which have been pricing in a Democratic victory for the last several months.

 

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