What Markets Are Saying About Odds Of Trump Impeachment

Posted: Feb 12, 2018 11:05 AM
What Markets Are Saying About Odds Of Trump Impeachment

Trump is quietly beating the impeachment effort. As of this writing, the political prediction market PredictWise – which uses multiple metrics including betting markets to predict political events – gives Trump a 64% chance of finishing his first term. Since mid-December, shortly after the Senate passed tax reform, Trump’s probability of finishing his first term has been steadily climbing. At the beginning of December 2017, Trump had a 48% chance of finishing his first term. For comparison, after he fired James Comey, the probability of him finishing his first term dropped to its lowest point ever: 42%. So as of two months ago, the probability of Trump being impeached (or resigning) was only 6% higher than it was at its lowest. That has changed rapidly, rising by over 15% in two months.

Markets are signaling that if Trump could just keep quiet, his Presidency will be saved. But he might actually be short-sighted and reckless enough to incriminate himself, as political betting market PredictIt is projecting a 40% probability Trump will testify to Robert Mueller. I’m sympathetic to Trump’s point of view: as far as he’s concerned, the Russia investigation is a witch hunt and he is “totally innocent.” Like so many other innocents accused of crimes, Trump might fall into the trap that you can prove your innocence by talking to the authorities. His lawyers are rightly trying to dissuade him from testifying, as it is now a matter of some consensus among non-partisan political analysts that Trump is likely in the clear for impeachment if he does not talk to the special counsel. Both PredictIt and PredictWise agree, giving him a roughly 2-1 probability of finishing his first term.

That number has been steadily rising over the past two months, without much fanfare or coverage. From the perspective of the media, that makes sense: Left-wing media wants everyone to think Trump’s impeachment is imminent because then they’ll keep watching CNN. Right-wing media wants everyone to think there is a deep-state conspiracy to eject Trump because then they’ll keep watching Fox News.

The actual situation is not as sensational: the Mueller investigation appears to be approaching its close, and though people around the Trump campaign were clearly involved in nefarious activity with the Russian government, President Trump himself has not been, and likely will not be, implicated. That is not a headline-grabbing narrative; it supports neither the notion that Trump is a corrupt lackey of Vladimir Putin, nor the notion that there is a massive deep-state conspiracy to eject Trump. As is generally the case, markets are closer to the truth than media. If the prediction markets are to be believed, the Mueller investigation will likely not turn up anything catastrophic. That is if Trump, for the first time in his presidency, is smart enough to just listen to his lawyers and shut up.