After an involuntary 24 hour blogging hiatus, and after a fast skim, not much calling out to me in Barron’s or WSJ, I felt the NEED to post something.

So let me throw a bone to the Prediction market crowd.

Here’s the trading activity in the Karl Rove Indicted by December 31 2005 futures; Anyone want to hazard a guess as to what’s up wit dat?

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click for larger chart

Chart113404886621314539_1

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Note the activity on Wednesday, December 14 — towards the right hand sidfe of the chart — that’s an enormous spike in trading — its comparable to the trading when Libby was indicted.

Let me hasten to add that the Rove to be indicted on or before March 06 started trading the next day; Perhaps that had some impact on the this futures series.

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via Intrade, as pointed out to me by Don Luskin

Chart

Category: Politics, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

5 Responses to “Activity Afoot in Rove Indictment Futures”

  1. Hello Barry Ritholtz,

    My hypothesis is that the trading activity at InTrade/TradeSports is a follow-up of the online publication of a Time reporter’s confession about the fact that she had talks with lawyer Bob Luskin about Karl Rove.

    What Viveca Novak Told Fitzgerald
    http://www.time.com/time/magazine/printout/0,8816,1139820,00.html

    More on this:
    http://www.time.com/time/magazine/printout/0,8816,1139842,00.html

    Best regards,

    Chris. F. Masse

  2. No explanations are really convincing to me. 1) Why such a lag following an article from the 12th? The market was just asleep, then cascaded? 2) The introduction of the new contract suggests some sort of “roll” trade, but that doesn’t make any sense. 3) As I watched this happen on the 14th, I asked myself “if this is a real leak, why is it snapping back so fast?”.. which suggests 4) manipulation.. but that makes little sense either. A reflexive speculative attack makes absolutely no sense, and if someone was long and trying to spook the market into giving them better exits, that was just crazy. Speaking of manipulation and reflexivity, I will be posting on these topics over at my blog in the next day or so.

  3. Oh, and check-out this great passage from the new Rhode/Strumpf paper “Manipulating Political Stock Markets”:

    Contrary to these sanguine assessments were the frequent assertions that active partisan involvement, especially by Tammany Hall, systematically distorted the betting odds and, in selected instances, speculative attacks and manipulation sought to change the momentum of the races and influence voter turnout. [...] As an example, in 1916, Democrats charged “the money was being sent to Wall street to force the betting odds to Wilson’s disadvantage” [...] “Already,” one prominent Democrat said, “we are hearing that many up-State farmers are struggling between their conscience and fear that Hughes will be elected and it might be found out that they voted for Wilson.”

    “Already” indeed!

  4. Jason Ruspini asked why the lag.

    It’s not the first time I notice such a lag.

  5. Well, full and instant dissemination of info is the stuff of academic models, but it still seems that this market should have reacted more quickly if the articles were the cause. Nothing on the Tradesports forums on this either.

    My post on political prediction markets, manipulation and self-fulfilling prophecies is out:
    http://riskmarkets.blogspot.com/2005/12/dark-side-prediction-markets.html