Has YouGov done punters a favour?

If there’s one thing that the declining Tory ratings, topped by the YouGov 2% lead, have done it has been to change the narrative. For what looked only two months ago like a foregone conclusion can now be reported as a real race again.

The prospect of Brown’s Labour coming on top with most seats has shaken everything up and I wonder whether without it Cameron’s latest “most important speech of his career” would have got anything like the coverage that we see on the front pages this morning.

And if, indeed, the scale of coverage is a driver of poll ratings then Cameron Towers must be hoping that the numbers start to move towards them again. For one thing about bullying/Rawnsley/”forces of hell”/etc is that it has all been Labour focussed with the consequence that others have been blanked out of the news.

As I have argued here before there is an element of the voting intention shares, maybe as much a four points, that is almost totally coverage related. If my theory is correct then the Tories should start to see some polling progress again - the question is how much?

So what about the betting? The markets have reacted sharply to the weekend moves and the latest Sporting Index are down to C324-329: L241-246: LD53-56 seats. Could today be the day you buy the Tories again?

Having been a Labour buyer and Tory seller I took my profits yesterday afternoon. As it turned out I closed down my positions a little early and would have made a bit more holding on. Now I’m back in the market going the other way. For if there is a Tory poll recovery - even a small one - then prices might move sharply.

One of the joys of spread betting is if you’ve predicted the market move correctly then you can close the position pocketing your profits now. You don’t have to wait for the actual election.

Mike Smithson

House of Commons Research paper

Will the markets gravitate again towards a UNS view?

The above is a chart that features in a recent Commons research paper based on what happens if there’s a uniform swing across all constituencies from 2005 election adjusted for the notional 2005 results because of the boundary changes.

So taking last night’s ComRes poll split of 40-29-21 the rigid application of the UNS formula has the Tories still short of a majority even though the lead is a full eleven points. Just compare it with the table produced by PB’s Andy Cooke which points to a majority of more than 120 seats.

And therein, I believe, lies a huge betting opportunity. For based on gambling patterns ahead of previous general elections it will be the strict UNS view that prevails, particularly in the final few days when high-rolling punters start taking an interest.

And if your view like mine is that the outcome will be more in the direction of Cooke then there’s the prospect of profits in almost the whole range of election markets.

But don’t bet now for currently the betting is mostly ignoring the UNS. The overnight Betfair party line market had CON 346- 352.5: LAB 214.5 - 218: LD 53.5 - 54.5: SNP 10 - 12.5: PC 4 - 5.5: DUP 7 - 8.5 seats.

In 2005 when the LAB>CON swing was mostly the result of Labour votes going to the Lib Dems the spreads finished up almost at UNS levels - with the Tory final price at about 182 seats - sixteen short.

The characteristic this time is that the Tory share is running a lot higher which opens up the dynamics outlined by Andy Cooke.

My plan is to defer my big general election bets to the final week when the opportunity for profits will be greater.

Mike Smithson

****Bunnco on the election/budget timing on PB2****

Sporting Index

Is it Brown that’s now looking a bit vulnerable?

One of the great attractions of spread-betting is that you can close positions down and pocket any profits months or even years before the event has been resolved.

Another attraction if you are really serious is that you can operate on a credit basis which means you don’t have to put up any money when you make your bet.

So in the early hours of Sunday morning after seeing the mounting evidence from the polls I placed my first bets for months on the Labour - Conservative clash. My sense was that sentiment had changed and my intention as I wrote at the time was to make trading profits.

I bought Labour at 215 seats and sold the Tories at 350. The markets have moved quite sharply since then and the latest spreads are above.

I was planning to stay in there because like many others I guessed that Cameron would have a grisly PMQs today thus reinforcing further the hung parliament narrative.

Well he didn’t and Brown looked super-vulnerable on the defence budgets and his sudden conversion after all these years to electoral reform.

When I closed the bets down the Labour buy price and the Tory sell price had shifted by 17 seats. You have got to cover the spread so in each case I’ve been able to make a profit of twelve times my stake level which I can transfer immediately to my bank. Nice money given that it was all done on credit and I didn’t have to lay out a penny.

Maybe the price will move more towards Labour and against the Tories and I could have made more. Who knows? But I’m a cautious gambler and love taking profits.

Mike Smithson

Have the markets got them priced too high?

There’s been little reaction overnight on the spread-betting markets to the YouGov and Ipsos-MORI polls with Conservative leads of 7% and 8% respectively. These are gaps that take us firmly into hung parliament territory - a situation that’s reached with a Tory seat total of 324.

Compare that with the spreads above. SportingIndex at 6am had a range of 350 - 355 seats which is well above the hung parliament threshold and the seat total suggested in the two polls.

I’ve had my first main party spread bet for months with a sell of the Tories at 350. The media narrative is likely to be shaped by these two surveys much more than the PB/Angus Reid poll which still has Labour on 24%. It might be that the latter is getting it closer but if you bet to trade like I do it’s market sentiment that matters.

Labour’s problems in all of this are the desire for something different and the continued unpopularity of Mr. Brown. ICM only a few days ago had 66% saying it was “time for change” with just 25% agreeing that “Continuity is important - stick with Labour“.

In the MORI approval ratings Brown has recovered a bit on December but is still down on November and has a double digit deficit compared with Cameron.

The betting is going to be driven by the polls and if it is anything like last time then ICM and YouGov will be the ones the markets take note of most.

Mike Smithson