Good morning! Starting today we introduce the Adjacent Midterms Election Tracker. With the launch of prediction market indices from Adjacent we will cover the midterms through the lenses of the specific indices, tailored made to aggregate hundreds of political prediction markets.
Outside of the Iran war, midterms are the most important global event this year. They deserve a proper place in our Morning Brief as we get closer to the election night.
That being said, we will still highlight the biggest moves on prediction markets, regardless of the category to deliver you the most impactful news first thing in the morning.
Let’s take a look at the markets to make sense out of the news!
The Midterms Tracker
RED
RED is the cornerstone index. It is a forward looking index, taking into account elections across the board - from mayoral, through gubernatorial to Congressional and presidential. That way it delivers a clear, aggregate forecast of Republican expected power.
RED is structured to trade between 50 and 150, with 50 representing a total Democrat dominance, 100 representing a 50/50 balance and 150 representing a total Republican dominance.
Now the index trades at 91.24, indicating Democrats are a slight favorite to control the political landscape in the future. RED also has a sister index, BLUE, that mirrors RED.
Senate
There are also two senate indices: SENR and SEND. They also mirror each other, representing aggregate chances of Republicans/Democrats controlling the Senate after the next election. The mechanism is exactly the same as in RED, with the index ranging from 50 to 150 and 100 representing a 50/50 balance in chances.
As of today, SENR trades at 99, indicating that prediction markets are close to being evenly split between Democratic and Republican control of the Senate ahead of the midterms.
House
HOUSER (and its sister, HOUSED) behave exactly as SENR (and SEND), showing aggregate chances of either party’s control of the House of Representatives.
As of today, the HOUSER index trades at 75.54, indicating that prediction markets expect the Democrats to control the house after the midterms.
From now on, we will comment on the daily moves of these three indices to show you how aggregate moves on prediction markets impact the overall chances of either party’s control of the political landscape in the future.
Main Events Of The Day
#1 The Strait Of Hormuz
Despite the MoU, the Strait of Hormuz remains effectively closed. The most recent data drop shows clearly that the traffic through the strait is far from normal.
At this point we believe that even prediction markets are consumed by the Trump narrative giving 46% chance of traffic normalization by the end of July. However, they are still far ahead of energy markets, where WTI is close to trading in the 60s:
#2 Meaningless Resolution
Traders were shocked by the Senate passing the war powers resolution on the Iran war.
Markets had it trading below 2c just before the resolution, indicating that there was really no sign that Congress would vote on limiting Trump’s power. However, Trump is expected to veto the resolution, rendering it meaningless.
In the end, while meaningless from legal perspective, it is an indication that Congress is tired of the Iran war and wants it resolved before the midterms. We’ll see how this event will impact the indices.
#3 The UK Is On A New Path
Andy Burnham is wasting no time. The party rallied behind him and he is now expected to be appointed in the next 3 weeks.
Traders have no doubt he will be the next PM. The real trading on prediction markets will happen on the new cabinet, which will give us more insight into the new path the Labour Party and the UK are taking.
#4 Romania Can’t Decide
Traders are betting on Sorin Grindeanu to be the next PM of Romania after the president urged a minority government to avoid snap election.
George Simon’s plan is working perfectly while the pro-EU president is trying his best to allow for the new government to form. Traders are now considering a snap election as the most likely outcome, with August and December strikes surging above 50%:
#5 Ronaldo Is Still King
Ahead of the World Cup, traders were rather bearish on Ronaldo making it big. Considering his age, it was no shocker.
However, the Portuguese star is delivering above expectations having scored 2 goals already. The market surged as Portugal is looking to advance beyond the group stage:
Who is your favorite to win the World Cup? Comment below!
Wrap up
That’s all for today!
We will continue to monitor the situation on prediction markets.
Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!
This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.