Threadster: A Week Without Hillary

Despite the just-wait-until-Super-Tuesday enthusiasm of Manhattan-based media analysts, you won’t find a lot of people with money on the outcome advocating YES for Mike Bloomberg winning a primary – any primary.

“Imagine paying $500M and not win a state,” sneers zeroprofit.

“I guess with this guy you can’t rule out him buying a pizza for everyone in the Virgin Islands or something,” says a doubtful SmootHawley. “But short of that kind of scenario…”

The Bloomberg-is-doomed sentiment is less pronounced over on the Who Will Be the Democratic Nominee? thread. Mini Mike, as the President we-believe-affectionately refers to the billionaire homunculus, is trading at 12-cents. That’s two Yangs – a unit that gauges the general balance of a market based on the value of an Andrew Yang share on the same market. The value of a Yang has been appreciating, of late, so it’s significant that in the last 30 days Bloomberg is the only candidate of positive Yang worth who’s value (in Yangs) has actually increased.

YES at two Yangs provides a lot of upside.

“This is why people who focus on NOs (at 89-cents, or 0.93 Yangs) are weird to me,” says AxiomofDominion. “At best you can double your money at a huge base cost. In most cases you might get 10-20%, again at a massive cost of having money stuck. A single smart YES play can quadruple or quintuple your money and you can dump the position in only a few months.”

Assuming, of course, that there is such a thing as a smart YES. Which is why it’s called “gambling”.

GENERATION SHOOT-OUT IN NERDLAND

The discussion thread on the Recession in Trump’s First Term page brings joy to our nerdboy heart. It reads like a faculty symposium at a second-tier university, is driven largely by economic arcana, and vividly illustrates William Goldman’s principle that no one knows anything – which is, of course, truer for economists than just about anyone.

We will do our best to not go into detail because life is short and, you know, economics. Suffice to say that last year’s inversion of the yield curve powers the conversation. The yield curve is a graph showing interest rates across different contract lengths. Ordinarily, longer contracts have higher interest rates. But when shorter-term commitments become more valuable — when the curve inverts — it is seen as a lack of investor confidence in the future and a harbinger of recession.

“According to the yield curve the recession should hit sometime near October 2020,” he says, full of confidence, “which would just barely be early enough for this market assuming this market goes until March 2021.”

A few days later he backs off a little, countering his own argument: “I know one economist who predicted the .com crash and the 2008 crash specifically and publicly ahead of time who does not put much stock into the yield curve.”

Not long after that, fully aware the price of YES futures has dropped from 40 to 18 cents since its yield curve-inspired peak in October, he all but abandons the inversion as a relevant factor. He lowers it in credibility below a bunch of secondary statistics Wall Street watches to a position just above a placeholder (etc.) that encompasses things like tarot cards and the width of the color bands on wooly-worm caterpillars.

“Leading indicators,” he says, “are things like manufacturing (in contraction), transportation (in contraction), home price to income levels (record highs), stock price to dividend ratios (high), yield curve inversion (signaling a mid-2020 recession), etc.”

So, if you’re keeping score at home, note that Inverted Yield Curve futures, at least according to Mr. Erikbays, are dropping precipitously in value. It would have been interesting to watch him talk himself right down into a smoking crater, but threadster Kim intervened.

“Permabears trying to scare ppl with ‘inversion of yield curve’ garbage,” she says. “Ok, boomers, Heisenberg Principle, this indicator won’t work anymore. Stock markets will quadruple from here. Buy buy buy!”

From “OK, boomers” on, the thread swings wildly between irrelevant generational invective and obnoxious generational condescension. Eventually, Kim settles everything by wildly overstating the President’s control over the economy.

“Here’s some common sense for the day,” she says triumphantly. (We assume Kim is female based on the Census Bureau’s calculation that 99.99% of people named Kim are female.) “Would the Donald and the Republican Gang allow a recession under their watch, right before the elections?”

Of course not, but neither would any other President and, somehow, we keep having recessions.

So what do we know after all of this? About the economy, not much. But we’re pretty sure this proves William Goldman was right: nobody knows anything.

Full disclosure: I’ve got a small investment in YES futures – the value of a couple of shots of mid-range Bourbon at a bar in an unfashionable neighborhood. Those shares have lost 50% of their value since purchase – which tells you something about why this column is more about other people’s opinions than my own.

ONE TWEET, TWO TWEET, THREE TWEET, FOUR HUNDRED…

We are not big on markets predicting the number of Tweets by a political actor. We have no idea how to calculate behavioral risk posed by someone who is both old enough to purchase alcoholic beverages and wealthy enough to afford a smart phone. (Mike Pence doesn’t drink and doesn’t tweet much: that’s our go-to correlation.) But a note on the AOC Tweet market suggests a betting strategy that makes a surprising amount of sense: betting a lower total early in the betting period to profit as the number of tweets rises past your bet.  

“I know it’s a simple answer,” says Jeffasaurus, “but the longer version is this: AOC would need to tweet way more than normal over a several days to approach B9. Along the way, B7, B8, etc. will rise too. Why not buy a B8 when it’s cheaper if you think she might tweet a lot and just ride the wave and sell high?”

THE OVER/UNDER MAY BE INFINITY

PredictIt Market Suggestion of the Week: We’re impressed not just by how many third-rate dirtbags orbit our President, but the frequency with which Trump fans publish photographs of themselves with Trump himself. It’s like everyone who comes into his line of sight gets a photo and thumbs-up.

We think PredictIt should open a market at the crosstab of those two groups: people who have had their picture taken with the President and are also either indicted or the subject of a formally announced investigation by any law enforcement agency above the constable level.

It’s a market that could be disrupted by a single cell-phone dump from, for example, some running-buddy of Rudy’s seeking a shorter sentence. That volatility could create a lot of short-term action, which we like because patience is not one of our best things.

Who’s in?

Follow @TomSayingThings on Twitter where he talks mostly about politics and whiskey.

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