Archive for June, 2016

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The Conservatives’ paradoxical leadership contest

Tuesday, June 28th, 2016

 

Both Theresa and Boris wanted to lose the referendum

If Leave had gone down to a narrow defeat, Boris Johnson would have had all the power with none of the responsibility. He would also have had a senior Cabinet role for a year or two, and a chance to prove himself at that level. There’d be no immediate crisis to manage, and any trouble from Europe – and there would surely have been some – would play to his advantage.

With a narrow Remain win, Theresa May would probably have stayed at the Home Office (though there was a chance she’d have moved sideways to the Treasury or Foreign Office). George Osborne’s hopes would have been fatally wounded by the referendum, but other Remainers such as Stephen Crabb would have been well positioned to eclipse her. Turning 60 in October, it would have been easy to conclude that her time had passed.

The seismic Brexit vote and its aftermath changes everything. This is now extraordinarily close and it may be that the desire for stability and unity trumps the logic of letting a “Leaver” lead.

Tissue Price



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Corbyn loses the confidence vote by a huge margin

Tuesday, June 28th, 2016

What a devastating indictment from his colleagues

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The big question is what now? What will happen over PMQs tomorrow. Is he going to soldier on?



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Team Corbyn says he’ll carry on if the confidence motion goes against him but it will surely be the start of the end

Tuesday, June 28th, 2016

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Labour MPs at Westminster are currently voting on the no confidence motion that was tabled last night. Voting finishes at 4pm and it’s expected that the result will be announced by 5pm.

The assumption is that he’s going to lose and the question will be what happens next. The motion itself is only advisory and Corbyn can just remain if he wants to.

The message from his team is that if his MPs want to oust him then then it will have to go to a new leadership election. That’s what they are saying now but it’s hard to see that being carried through for the next two months at such a critical time in British politics.

Just imagine the fun that Cameron will have at PMQ? How will Labour MPs react? We saw yesterday Corbyn being booed in the Commons by some of his own MPs.

Carrying on in such circumstance is going to be very difficult. In the end this is about perceptions of competence within the party and the New Statesman’s Stephen Bush is saying that this is not what it was. He highlights the recent Vice News which Bush says seems to have caused more damage than anything else.

Update from my Twitter feed

Mike Smithson




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Don’t write off Mr. Johnson just yet – there are many twists and turns to come in the CON leadership race

Tuesday, June 28th, 2016

I must say that I am a fan of the Conservative party leadership selection process. It has been designed to give a proper role to Tory MPs while leaving the final choice to the postal ballot of party members. It is the system that saw IDS win in 2001 and, of course, Mr. Cameron in December 2005. It would not have allowed a hapless no-hoper like Labour’s Corbyn who only got into the members’ ballot because because some non-supporters decided to nominate him.

At the moment we are in the nomination stage. These open today and close on Thursday. The list will be announced on Thursday with the secret ballot of MPs taking place a week today. Bottom in that vote then drops out and we have further ballots every Tuesday and Thursday until the final two have been chosen. This short-list then goes to the membership.

So the latest YouGov polling which the Times is leading on this morning is really not that much of a guide. It was a standard poll with the preferred CON leader numbers showing the totals from all sampled and those who are Tory voters. The latter cannot be said to represent the membership.

The most striking feature was that Tory voters put May in the lead not the ex-mayor. Whether similar considerations will apply amongst MPs we don’t know. Johnson’s biggest weaknesses amongst them, I’d suggest, is that he only returned to Westminster two years and doesn’t know that many of them and that he’s not held a senior ministerial post. May has been Home Secretary since May 2010 and her colleagues will have a very good sense of her abilities.

The other potential contenders, Andrea Leadsom, Stephen Crabb and Liam Fox have only had very limited ministerial experience – the latter, of course, was forced to resign as Defence Secretary after a relatively short time in the job.

Mike Smithson




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Theresa May 7% ahead of Johnson amongst CON voters in first leadership race poll

Monday, June 27th, 2016

Meanwhile with LAB the Mirror speaks out



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The EU referendum: An attempt to analyse the in-play betting

Monday, June 27th, 2016

PoliticalOdds

Michael Dent the creator of PoliticsOdds.bet, a site which tracks and graphs betting prices on political events, looks at the EU Referendum in-play betting

At 11:36pm on June 23rd, just before the first result was declared, the market was just short of 90% confident of a Remain vote. So much for markets knowing best – the market was wrong, and staggeringly confident in its wrongness.

So how did we get from there to settling the market for Leave? What follows is an attempt to analyse five hours of in-play betting. Of course, it is highly speculative, and it’s easy to create a narrative with perfect hindsight, so comments are welcome!

Inertia

When early results indicate a possible surprise event, the market is stubbornly slow to adjust. We saw it in the general election last year, when even after the shock exit poll it was possible to get excellent odds on a Conservative majority. And we saw it again here.

As results rolled in, suggesting that at the very least it was much closer than previously assumed, you could almost hear the excuses – that these must be freak results, that they did not represent a trend. But a trend of Leave over-performance against the parity model was indeed emerging, particularly by Swindon’s declaration. As a result, there was value to be had on the Leave price.

I think a bold gambler starting the night with a neutral position would have built a position on Leave here. Bets placed during this phase could have yielded a 200-500% profit.

Animal spirits

At 1:56am, a period of almost an hour of relative stability in the betting market turned to severe volatility for the next 90 minutes. The market moved fast and sharply. Within 45 minutes we had an astonishing three distinct crossover events.

During this period, I believe individual results moved the market far more than they should have done, magnified by animal spirits and confusion as gamblers were hypersensitive to any result that appeared likely to change the narrative.

Our smart gambler would have compared each result to her parity model at this point, and realising that the individual results did not signpost a significant change, would have stuck to her hypothesis, aiming to top up her position at the best prices. A more risk-averse gambler might well sit this period of volatility out and just watch the data, and no-one would blame him!

Acceptance

From 3:20am, the market began to accept a Leave outcome.

Our smart gambler had made her money by now and would have eased up on the betting. A risk-loving gambler (or one desperate to cover a loss) can still make some money here – even when the outcome looked pretty clear, profits of up to 30% were still available.

But the risk-reward pay-off was weakening fast at this point, and by the time available profits fell below 10%, any sensible gambler should have been of Leave, and perhaps building a small hedge position on Remain at >10 odds, to protect against a last minute black swan event (when the graph looks like this, anything might happen!)

A word on volumes

I was astonished by the in-play volumes. As PB reported, by 6am on polling day the EU referendum had become the first market on Betfair to surpass £50m in cumulative bets. But by the time the broadcasters called the result for Leave, the total matched on Betfair had more than doubled £113m.

So despite a four month campaign, 55% of all betting was matched in the final 24 hours. On three occasions during the in-play period covered here over £800,000 was matched in a two minute period. Most two minute periods saw at least £200,000 matched. Truly the biggest political betting event ever.

Lessons

In the chaos of in-play betting on an event like this, a calm head allows a smart gambler to make money. Or to keep their shirt – for me personally, I started the night with a significant position on Remain at 1.55 average odds. By the end of the night, I was able to finish with a small profit. I was lucky.

I shouldn’t have been able to get away with that – I should have lost my shirt. But by keeping a calm head and following Mike & others, I was able to turn a potentially very bad night for me into an OK one.

Michael Dent

Thank you to everyone who followed the betting prices at politicalodds.bet. I apologise for the server crash on 20 June and the fairly slow service during some of the most exciting moments of 23/24 June. We’ll be working on improving capacity for future events. In the next six months we’ll be closely following the Conservative leadership contest and the US Presidential Election.



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Those who say that the bookies got EURef wrong don’t understand betting

Monday, June 27th, 2016

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Ladbrokes betting barometer 2239BST June 23rd

Punters aim to make money not to provide an alternative opinion indicator

As well as the cries that the polls got EURef wrong there’s been something of a backlash against the betting industry which more than at any previous election had sought to promote itself in the manner that Ladbrokes did in the graphic above.

    They are being attacked for “getting it wrong” – something you’d never hear after, say, the Grand National when, as this year, a 33/1 outsider took the crown. By the same argument you could say that the “bookies get it wrong” whenever the favourite doesn’t win which is very often.

A problem is that some bookmakers have not helped themselves here. The Ladbrokes “barometer” and similar concepts from other firms did give the impression that they tried to present themselves as an alternative way of looking at opinion.

People bet to try to make money and have the satisfaction of being proved right. They are not doing it to provide an opinion poll alternative.

For me political betting is all about finding what I regard as “value” propositions where the bets available on the spreads, exchanges or with traditional bookies are understating my assessment of what could happen. Thus throughout the referendum campaign I never rated REMAIN at higher than a 55% chance.

Whenever I quote betting odds all I am doing is reporting what’s happening on the markets. Stating what the latest prices on an electoral outcome is not me saying that these are a correct indicator. In fact my whole betting approach over the decades has been to find bets where I think the prices are wrong and to suggest that there is value.

It should be said that I didn’t put a penny on REMAIN throughout the campaign even when it had big leads in the polls. The very tight prices that were offered simply did not provide any value. The risk of LEAVE doing it was always greater and I was never tempted.

What I think we are seeing is a reaction against the PR exercises run by some of the bookies to highlight their prices by such devices as the Ladbrokes barometer above.

Mike Smithson




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The fight to be next CON leader and PM: The race begins

Monday, June 27th, 2016

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We’ve just got details of the Conservative leadership contest. The plan is to start it immediately and have Cameron’s successor in place on September 2nd.

The process will be the same as the one used in the 2001 and 2005 elections. MPs will hold a series of ballot until a final short-list of two is agreed which will then go to the party’s 150k members.

Nominations will close on Thursday then MPs will vote every Tuesday & Thursday until a shortlist of two is agreed. That will then go to the members’ postal ballot. So the first results will come a week tomorrow.

The fact that this is being truncated is said to help Johnson because it will leave less time for an ABB (Anybody But Boris) to emerge.

Mike Smithson