David M Rothschild on Posted on

Added on 10/26: the market-based prediction for Brexit did hit 12 percent on the night of the referendum after Nigel Farage conceded that Brexit would fail. Of course, he was wrong, but it was reasonable for the markets to react to the leader of the Brexit movement announcing he was going to lose.

As I wrote after Brexit, the US presidential election is not Brexit. Despite Donald Trump, and even data driven pundits, clinging to the idea that this election is a repeat of the June referendum on the UK leaving the EU there are some key differences.

Going into Brexit the polling was favoring Brexit (or leave) until the last day or so when it broke remain. Consequently, the market-based predictions gave Brexit just 25 percent. This was reasonable as the polling was breaking toward remain and historically undecided voters tend towards stability. Obviously, the 25 percent event happened.

First, we have much more data on the US election than Brexit. We have historical fundamental data. We have national polling and polling in the states. We have multiple markets. We have forcasted this event year after year, but Brexit was a one-off event.

Second, we have more stable data than Brexit. Most people had only a passing understanding of what Brexit was going into the vote. There was a lot of noise and undecided in the polling. This is not the case in the vote for the US presidency. Voters have stable, well-defined sentiment. And the voting population is stable and well-defined. There is no evidence of hidden Trump voters, just like there were not hidden Brexit voters; the polls showed a close election for Brexit and we got one.

Third, we are forecasting 51 separate outcomes that not perfectly correlated. Even if we are a little off on a few of them, the overall outcome would be stable.

Fourth, Clinton is dominating the polls. While remain was losing most polling until the very end, Clinton is dominating the polls. Clinton is 91 percent with three weeks left until Election Day, while remain was 75 percent on Election Eve.

This is not Brexit we have more data, more stability, and more outcomes. And, while Brexit was close, Clinton is dominating.