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PB Index moves sharply to the Tories

December 1st, 2008

Today’s Balance of Money Index: CON MAJ 54

On Thursday we published the first PB “Balance of Money Index” which seeks to translate current opinion on the betting markets into a single number representing an election outcome. The first one, less than four days ago, pointed to a Tory majority of just 26 seats.

Since then there has been the Green arrest and two new opinion polls showing moves to the Conservatives with ICM pointing to a 45% share for the party. That took place entirely before the Green news broke – part of the Ipsos-MORI surveying took place on Friday but when the headlines were dominated by Mumbai.

What shifts the numbers, of course, on the spread markets is betting activity. If, as has been happening, the cash is going on the Tories or against Labour then the party’s price will move. So changes reflect the views of gamblers prepared to risk quite a lot of money on their judgements.

The Tory seat spreads are only two seats down on the market peak in mid-September when one pollster had the party 28% ahead.

My reading of the markets has been that the Damian Green arrest and the growing controversy has been pushed prices more than the new opinion polls which both have Labour in the 30s – something that we were not seeing until late September.

The latest PB index is based on just two sets of spread prices – the third, IG Index, has not been showing the market during the weekend.

Note: the commons seat spread markets are the arenas where gamblers buy and sell the numbers the parties will get at the general election as though they were stocks and shares. The higher number in the spread is the BUY price and the lower number the SELL one. A key feature is that you can close down positions at any time taking an immediate profit if the spreads have moved in the direction that you anticipated.

Mike Smithson






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