My friends, think of where you were a year ago. If you’re a liberal who was in full “trust the science” mode, you were probably sanitizing your groceries and shopping for #Cuomosexual facemasks.
If you were a Trump true believer, you were mainlining hydroxychloroquine and counting the days until your max bet on MAGA winning re-election paid out. What’s my point? A lot can change in 9-12 months. So while only 25% of 2021 is in the tank, there are some end-of-year markets that are priced like we should be Christmas shopping right now. Even if these markets end up resolving as currently predicted by their price, that’s not to say there’s no gas in the tank for them to go on a ride. Let’s look.
Will the Senate end filibuster on any bill with less than 3/5 support in 2021?
This is my favorite market with potential value based on how I think the next six months will play out. Traders placing the odds at over 80% (as of this writing) that everyone’s current positions will remain unchanged because of how strongly they are dug in right now is unwise based on how much time remains on the calendar and how much drive there is for the Senate to come through on the Democrats’ top priorities. Whatever short-tempered responses Joe Manchin and Kirsten Sinema happen to yell out in response to a question about the filibuster they are tired of being asked, their resolve has yet to have been tested by actual gridlock they have the power to break.
The fact is, there is a lot of legislative time left on the clock and Chuck Schumer has committed to putting multiple House bills on the floor related to immigration, gun safety, voting rights and union organizing whether they can muster 60 cloture votes or not. The filibuster traditionalists might seem inflexible now, but lets see how they feel after the Senate can’t even reauthorize the Violence Against Women Act. Manchin’s priority of being a centrist and coalition seeker may be overtaken by his desire not to be the Senate graveyard’s new caretaker. Or, it might at least temporarily seem this way.
Now, I’m also a realist and know that change comes slowly. If you max out at 80c on the filibuster remaining, you’ll might be ok if you don’t log into your account for a year and just wait for your pay out. But if you believe that even if the filibuster stays there is going to be more than a few times in the next nine months it looks like something might change, there is a goldmine to be made on buying Yes. One statement from Sinema along the lines of “Well, maybe…” after a major defeat on a high legislative priority issue changes the game.
Will there be more than 9 Supreme Court justices at any point in 2021?
Honestly, you can Max No on this at 97c and just collect your $20 at the end of the year. But, there’s a decent chance Yes pops to 6-7c after a major conservative decision on voting or abortion that renews the call for court packing, so it’s probably better to stay neutral and nimble. If you’re a legit degen, you can buy 21,000 4c Yes shares and feel like a big man when your account value goes crazy for one afternoon, but if you don’t sell at that point I’ll never speak to you again. This same premise of news cycle-driven price spikes applies to the DC statehood, Puerto Rico statehood or $15 minimum wage markets (although they may also move in tandem with the filibuster market for obvious reasons).
Will the Federal Minimum Wage be increased to $9.50 by 9/1?
This one is a little tougher to call because the timing and sentiment is good for No but the mismatched coalition of supporters, including Josh Hawley, is good for Yes. I think this ultimately resolves No, but I don’t like the price on either side (85/15) enough to jump in. I think there’s room for movement on both sides and No will creep up first, but it won’t move enough to make jumping in at this price worth it. Plus, I think Democrats would let good be the enemy of great and not pass a $9.50 bill if it didn’t create a path to $15.
How many tie-breaking Senate votes will Kamala Harris cast in 2021?
I like the price of 25c on the highest bracket of 20 votes because it has a ton of upside and will pop frequently with Vice President Harris likely to cast several more tie-breaking votes this year even if she doesn’t make it to the high bar of 20.
Schumer committing to putting up bills that won’t meet the 60 vote cloture threshold will create many chances for tie-breaking votes, both procedural and final. But! 20 is a high bar and would take a lot of unified Republican resistance and a lot of floor action to actually get there. People are speculating that judicial nominations would rack up the tiebreakers, but that is yet to be seen as Biden got at least some bi-partisan support on every cabinet nominee thus far aside from Neera Tanden. I’m not sure what kind of judges are out there who would not get votes from Senators Collins and Murkowski and a few other Republicans. My strategy in this market is to buy the top bracket but also hedge with two random lower and middle brackets (I seriously don’t remember which ones) for a 40c-ish combo that I will probably hit or break even on as the year progresses.
Experience with betting on politics teaches you that the eventual outcome is usually less important than the events that happen along the way.
This is why it’s foolish to get locked into an expensive position (no matter how likely it is) this early in the year. When betting on long shots with a lot of time to play out, the most important things to consider are how much volume to pick up and what your selling point is. Look at the order book and make sure the market is heavily traded enough for an off-ramp to exist if you need or decide to sell. Buying 8500 shares at 10c in March might seem fun at the time, but not when there’s no floor between 9c and 2c to sell into come July. And holding all of those shares past 20c because you got stars in your eyes during a rally, only to watch them creep back to your purchase price (or lower!) leads to some stomach-churning regret. With so much time left in the year and a lot of uncertainty ahead, spring is the best time to plant the seeds of future wins and bragging rights.
So keep it risky my friends (for now).