Are the debates still in doubt? - Kalshi Kit
By Terry OldrealTwo months ago, we published an article discussing how the Presidential debates were in doubt. Specifically, we talked about the fact that while at least one debate was likely, beyond that, it was anyone's guess.
Well, in case you’ve been living under a rock, a lot has happened since late May. For starters, after a failed assassination attempt, former President Donald Trump is literally lucky to be alive. And after a disastrous debate performance, President Joe Biden is figuratively dead, having been replaced at the top of the ticket by Vice President Kamala Harris.
But despite all the turnover and turmoil, one thing remains the same: the debates are still in doubt…somewhat.
Remember: this is not financial advice. It's just the opinion of a guy getting paid to ramble on the Internet while using a pseudonym. So do your own research, and invest at your own risk. The author cannot trade on Kalshi.
‘Anytime, anywhere, anyplace’
Back in April, Trump offered to debate “anytime, anywhere, anyplace.” I’m not sure what the difference is between “anywhere” and “anyplace,” but after the past decade, that’s the least of my concerns.
The point is, Trump threw down the gauntlet, and the Biden campaign picked it up, agreeing to take part in two debates: one on June 27th, and one on September 10th.
But now that Biden has bowed out, Trump seems much less enthusiastic. Despite initially saying he would be ‘willing to do more than one debate’ with Harris, he is now refusing to commit until after the Democrats have formally chosen a nominee.
Harris, who claims she will attend the previously scheduled September 10th debate with or without Trump, has accused Trump of ‘backpedaling’ because he is afraid to face her. Maybe that’s true, and maybe it’s not. But given the fact that the Democrats have already switched candidates on him once this election, it’s not exactly an unreasonable ask on Trump’s part.
As the Wall Street Journal put it, “it’s chaos.”
Will Trump back out?
Assuming the Democrats formally endorse Harris, will Trump move ahead with a second debate?
Kalshi traders seem to think so. As of now, they are pricing in a nearly 50 percent chance that there will be a total of two presidential debates this year, and around a 30 percent chance we’ll end up with three debates, as other television networks vie for the opportunity to host.
That said, chances of there being no further debates in 2024 are still hovering around 20 percent. What accounts for this one-in-five likelihood?
As mentioned in our last article, Trump has a history of skipping debates.
In 2020, after initially being postponed due to Trump contracting COVID, the second presidential debate was canceled, at least in part, due to accusations of anti-Trump bias on the part of would-be moderator Steve Scully.
Fast forward to July 2024, and Trump is once again accusing ABC News, the network set to host the September debate, of being ‘fake news.’
"I’m not thrilled with ABC," Trump recently told reporters, "I guess they committed but I have at least equal say, and I don’t like the idea of ABC."
Sound familiar?
Please note that the odds for this market shifted after the article was written but before it was published. Click here for current odds.
Keeping his options open...
Despite Trump’s history of skipping debates as well as his recent apprehension, odds are Trump will eventually face Harris at least once, if not multiple times. But he’s clearly leaving himself an off-ramp.
Why?
A debate might not be worth the downside.
If Trump has a significant polling lead in September, a debate might be deemed too risky, since it could allow Harris a chance to turn the tide. Just ask Ron DeSantis, Nikki Haley, and the other Republican candidates who Trump snubbed in the primaries.
As September approaches, if the polls are tight or if Harris has the lead, expect the odds of a debate to go up. But if Trump has a clear lead heading into September 10th, a canceled debate is certainly on the table.
Our favorite markets...
FOMC FOMO
On Tuesday and Wednesday, Federal Reserve officials will meet for July’s Federal Open Market Committee meeting. And while most economists, as well as Kalshi traders, aren’t expecting a rate cut this time around, all eyes will be on Jerome Powell’s Wednesday press conference for hints about a September cut.
Previously, Powell has stated that the Fed will not wait until inflation reaches the Fed’s 2% target because at that point, “you’ve probably waited too long.” So the question is whether recent positive CPI and PCE data were enough of a green light for the Fed to act.
Currently, our traders price in an 82 percent chance of a rate cut in September, but only a 3 percent chance of a rate cut this week. Do those prices make sense given the Fed’s hawkish approach to rate hikes, or are dollars on sale for three cents?
The July Jobs Report
The June jobs report indicated a healthy, but slowing job market, coming in slightly above expectations at 206,000. Analysts expect more cooling in July, with the FactSet consensus estimate at 180,000. Kalshi’s market forecast is currently in the same ballpark at 186,000.
That said, Kalshi’s market also prices the chances of 200,000 jobs or more added in July at 39 percent, and chances of 250,000 or more at 15 percent. And considering every month this year except for April has come in above expectations, a higher-than-expected reading probably wouldn’t be a shock.
The Debt Dilemma
The U.S. national debt reached $35 trillion on Monday, which is an increase of $2.35 trillion over the past year. According to the House of Representatives Budget Committee, that breaks down to:
- $104,497 per person
- $266,275 per household
- $483,889 per child
As Jerome Powell puts it, “The U.S. federal government's on an unsustainable fiscal path.” But as Powell also points out, “It's difficult from a political standpoint” to bring the debt under control.
In other words, we’re probably screwed.
But how long until our fiscal chickens come home to roost?
According to Kalshi’s US Debt Default Market, there’s only a 4 percent chance that the government defaults this year. Of course, that just means we’re going to keep borrowing more.
However, there’s a 17 percent chance that the US credit rating will be downgraded again this year, as it was in 2023.
So Kalshi traders, for the most part, don’t seem to see much of a short-term threat posed by the national debt. But as Ernest Hemingway once wrote about bankruptcy, it happens “gradually, then suddenly.”
Winners of the week...
Last but not least, let’s take a look at some of our favorite trades of the week.
Kudos to mikeoptions for his $533.52 trade on the price of BTC.
And congrats to ishayh on his $767.10 win trading on the S&P.
And let's have a round of applause (you don’t really have to clap, since no one but your mom will hear it) for Gaeten, who earned another $2,081.40 in this week’s Rotten Tomatoes market. I assume he’ll just throw it on the pile, or perhaps make a down payment on a brand new 2025 Kia Soul.
Speaking of Rotten Tomatoes, let’s end with a special shoutout to itscharlibby, who absolutely nailed this week’s Deadpool & Wolverine score. I don’t know how much he actually made, but his prediction was spot on.
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