Don't trust Trump's turnaround in polls and prediction markets

Data expert Nate Silver is known for making big decisions in elections and at the poker table, and right now those two worlds have converged as both presidential polls and betting markets show momentum building for Donald Trump and Kamala Harris with less than a decline in the week leading up to Election Day.

Silver has been on record since last week saying the odds are in Trump's favor – he laid out his assessment in a New York Times editorial – but he also described it as a “gut feeling” rather than safer data science. In an interview with CNBC's “Closing Bell: Overtime” host Jon Fortt at the CNBC Technology Executive Council Summit on Tuesday in New York City, Silver made several major reservations about the current polling and betting markets.

Silver told Fortt that his current model shows the odds in favor of Trump, who has a 55% to 45% win probability advantage over Harris.

But he also said that for every anecdotal example he can provide of why Trump's momentum is peaking, there is “a counterexample.”

Trump's momentum in the polls has reduced or wiped out Harris' lead in some key swing states, but Silver says that comes after two straight cycles in which the polls have been “pretty bad” and there has been a lot of criticism of the polling industry since 2016 , believes “A lot of pollsters are raising their hands.”

“You’re printing a tie,” Silver said at the CNBC event, giving the example of a hypothetical pollster call: “‘Harris is up 3%? Let's say 1%. Trump is up 4? Let's say 1.5%. There is what we call “herding,” where people are drawn to consensus. You don't want the opinions to be too out of line.

Another factor that could skew the polls is that Trump voters are more “charged and excited,” which could lead them to participate in more polls than in the past, and Harris voters to participate in fewer polls.

Political polls are never as accurate as you expect, Silver said, noting that in most scenarios if you model a 52% to 48% lead and it turns out that, you'd still be pretty close The opposite is the case. But political polls are an exception, and they are becoming increasingly difficult to get right.

Polls in the most recent election have fallen by three to four points “systematically and across the board,” Silver said, so the recent small swings in the polls in Trump's favor are “swamped by uncertainty…basically distracting from the noise.” he said.

Five percent of people take surveys, “and they’re weird,” Silver said.

Most people no longer even have landline phones, which polls had relied on in past election cycles. “Old white people answer the phone, but other people dial,” he added.

Why there may be just “mood and chatter” in the betting markets

The betting markets are showing a much larger advantage for Trump: Big bets are being placed on Polymarket, Robinhood is getting in on the action, and presidential election contracts are becoming increasingly popular.

Wall Street research reports from major banks and billionaire investors like Ken Griffin and Stanley Druckenmiller suggest that recent moves in stocks and bonds are a sign of greater confidence in a second Trump term. Shares of Trump mediawhich runs the former president's social media platform Truth Social, also saw a sharp rise in recent trading, although the stock remains extremely volatile, plunging 22% on Wednesday.

Critics have raised concerns that election betting markets may be manipulated. But Silver, who works as a consultant for one of the leading prediction markets, Polymarket, says he wouldn't pay much attention to betting market data right now because it simply might not be very accurate at this point in the election cycle. In principle, they can take into account additional information like early voting and historical data, but there is limited historical data on elections that prediction markets can use as a basis for accuracy, so most of these calls are “calibrated based on sentiment and chatter.” are. rather than useful information, Silver said.

There are certain times when prediction markets work. Just minutes after the Trump-Biden debate ended, Silver said, prediction markets knew it was bad for Biden and potentially implied a tougher race for Trump as well. And on election night itself, there are a lot of smart people who can take a closer look at the votes in each county and figure out which way the election is trending. But for now, Silver said, what's happening in these markets may be a sign that they can get “a little carried away” in their beliefs, rather than proving that they can “escape the conventional wisdom” about what good data analysis means is .

The real money is made from bets that can yield outsized winnings. Trump is not nearly as good a choice for the player as he was in 2016. In that election, Trump's chance of winning was 29% according to Silver's model, which was almost twice as high as Trump's chance of winning in most polls. For the player, this was a situation in which the risk was worth taking, as a winning bet made up for all losing bets many times over. This time that is not the case. In current prediction markets, Trump is favored over the vice president by 66 to 34 percent. This is because the polls and models show a much closer race, putting Harris in a position to arguably be the better choice.

Whatever the case, Silver says of the current election and the latest data, “Anyone who is confident in the selection is someone whose opinion should be disregarded.”

All the reasons Trump could win and Harris could lose

There are several reasons why Silver sees Harris as vulnerable. Inflation and immigration are among the losing issues for Harris that she inherited from the Biden administration, he said, pointing out that Biden was so unpopular with voters that he had to drop out of the race, and even if inflation is now under control, prices are still much higher than four years ago.

Globally, he noted, incumbent parties have had a difficult time in elections. The silver poker player – who has won over $800,000 in his lifetime as a professional player – described Harris as “a difficult hand to play”.

On the other hand, Silver pointed out that Democrats have won five of the last six popular votes, abortion is a big risk for the Republican Party in this election, and Democrats are generally good at getting voters to vote, while Trump is more or less left behind. This responsibility lies with Elon Musk, who has no experience with election campaigns. However, he added a caveat, saying this election could be one in which the surprising turnout benefits Trump more than Harris. Voter registration data has shown gains for Republicans in key swing states that contradict recent historical patterns.

“First-time voters aren’t as blue as usual,” Silver said. He described a liberal-leaning first-time voter as “no longer inspired by large structures like the Democratic Party,” but stressed that this was a fundamental shift and not specifically tied to Middle East policy.

“The likelihood of voting for Harris has shrunk,” Silver said.

Recent polling data has shown that younger Black, Latino and Asian American voters are shifting to Trump in numbers that buck historical trends. “That’s where he grew the most,” Silver added.

He gave the example of an 18-year-old, a first-time voter who would have been 10 when Trump was first elected, as a voter unlikely to be swayed by any concerns arising from Trump's time in office . And for young black voters, Silver said, the civil rights era is a distant memory that can erode historical ties to the Democratic Party.

Younger voters in particular, Silver said, are “disengaged post-Covid.”

Silver doesn't think Democrats made a mistake in putting Biden at the top of the ticket. “Biden was on track to lose in a landslide…all the swing states would have gone for Trump…they (the Democrats) were saved from certain death,” he said. But he believes the Harris campaign may have made a mistake by putting too much faith in what may have been just a “sugar high” in the post-convention and anti-Trump debate polls that most people felt Harris was fine with. In the short term, “they were running on sentiment,” Silver said. In his view, the Harris team didn't have a longer-term message and “didn't think about how it would play out by November.”

One advantage Harris has is that she remains more popular than Trump for a variety of reasons, including his beliefs. “Trump is anything but an ideal candidate,” he said.

Correction: Stanley Druckenmiller is among investors pointing to recent moves in stocks and bonds as a sign that there is greater belief in a second term for Trump. An earlier version of this article misspelled his name.