A few weeks ago, I unveiled my first forecast on the outcome of the 2020 presidential race. My estimate was that Trump had a 60% chance of winning. I was also careful to explain that my forecasting model includes constant updating (using what’s called Bayes’ rule) and would no doubt change between now and Election Day on Nov. 3, 2020. That’s normal.
Politics is a highly volatile process and it’s foolish to put a stake in the ground this early. My model has quite a few factors, but the leading factor right now is that Trump’s chances are the inverse of the probability of a recession before the third quarter of 2020. If recession odds by 2020 are 40%, then Trump’s chances are the inverse of that, or 60%.
With the passage of time, Trumps’ odds go up because the odds of a recession go down (a concept called “theta,” or time decay of a contingent outcome). If a recession does hit (we’re watching), then Trump’s odds go way down.
This dynamic can be used to explain and forecast Trump’s economic policies, including calls for interest rate cuts and efforts to place close friends on the Fed board of governors. It’s all connected.
As usual, I found myself out on a limb with my forecast; the mainstream media are sure Trump will lose in 2020, if he’s not impeached sooner. So it was nice to get some company, as revealed in this article.
A new Goldman Sachs research report also projects that Trump will win in 2020. Goldman shows a narrower margin of victory than my model, but a win is a win.
Of course, their forecast will be updated (as will mine) but we’re starting to see more signs from other professional analysts that Trump is a likely winner after all.
Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.