The Market Tells Us What To Think About Alito’s Hearings
Reading conflicting accounts of the Senate’s hearings on Judge Alito, I thought it might make sense to turn to the InTrade electronic futures market. This graph of the predicted likelihood of Alito’s confirmation is somewhat illuminating:
The trading history indicates a small run before the hearings began, but once the questioning started, Alito made a dramatic comeback. The last price I saw quoted was 97 (i.e., the traders think he has a 97% likelihood to be confirmed).
But that isn’t particularly surprising. I
data mined dug a bit deeper and found two other interesting results.
First, notwithstanding the acres of newsprint and blog-time devoted to the impact of these hearings on the Senate, the week’s graph predicting continued Republican control of the Senate after the ’06 elections is on the right. Yes, folks, all of the fireworks changed the market’s view of the Senate in ’06 not one whit.
Ok, you may say, the Senate as a whole may not change hands, but lots of folks said that the individual Senators on the judiciary committee surely had a lot at stake politically. Senator Biden, for example, nurses presidential ambitions, and he had a great deal to say this week. But the market for him becoming the democratic nominee in ’08 is to the left. It was, apparently, a quiet week for Biden.
These numbers suggest caution about the “flashpoint” story the NYT is trying to push. While it may be that the confirmation of Judge Alito will have long-term political consequences, the market (apparently) hasn’t made that precise connection. And only fools bet against the market. (Well, so do rich hedge fund managers, but that is a different story.)