August 8, 2004 | New York TimesIn the presidential campaign season, which is now unmercifully upon us, the worlds of politics, economics and the markets merge. Traders watch opinion polls for guidance on whether to buy or sell, pollsters track the markets for indications of the popular mood and campaign managers await each new macroeconomic gleaning with the jangled impatience of 3-year-olds at a Wiggles concert. While most public opinion polls show the Democratic nominee, John Kerry, with a slim lead, some market and economic indicators are telling a different story. On two exchanges where investors trade contracts on political outcomes -- the IOWA ELECTRONIC MARKETS and Intrade, based in Dublin -- President Bush has a slight lead. The Iowa market, housed at the UNIVERSITY OF IOWA, has been around since 1988. A comparison of 596 opinion polls with Iowa's presidential futures prices at the time the polls were conducted shows that the futures prices were closer to the actual result 76 percent of the time, according to THOMAS A. RIETZ, an associate professor of finance at the University of Iowa and a director of the market. As of Friday, Iowa traders thought that Mr. Bush had a 52 percent probability of winning. A version of the story also ran on the website of the L.A. DAILY NEWS in California.
Contact: Tom Rietz