Legendary investor Stanley Druckenmiller, when he wasn’t beating himself up for selling out of Nvidia too early, made an interesting observation in a Bloomberg Television interview: the market, particularly as seen in bank stocks and in crypto, has already started to price in an election victory by former President Donald Trump.

Nikolaos Panigirtzoglou, global markets strategist at JPMorgan, has reached a similar conclusion, and pointed out that markets are increasingly pricing in not just a Trump victory but a sweep by Republicans in the Senate and House.

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“The rising probability of a Republican sweep is also seen in the market moves over the past two weeks with stronger U.S. equities and in particularl U.S. banks, a stronger dollar, tighter credit spreads and higher U.S. Treasury yields,” he says. He did say that the market is not pricing in as high a probability of a so-called red sweep as the 45% chance implied in betting markets.

But then again, there’s something funny going on in betting markets. Particularly at the crypto-fueled Polymarket, betting odds are pricing a much higher probability of a Trump victory than the roughly 50-50 odds that polls — and poll readers like Nate Silver — are assessing.

One of the advantages of crypto markets is that observers can trace trades back to individual user handles, if not know who the person is behind that handle. And the big whale on Polymarket goes by the handle Fredi9999, who was betting for Trump, and against Vice President Kamala Harris, even as this article was being written.

Over on the social media service X, an account calling himself Domer says he’s interacted with Fredi9999 — and also come to the conclusion the same person is behind three other accounts, that as of Wednesday had cumulatively placed at least $25 million in bets for Trump or against Harris. Another user found that the four accounts rarely trade at the same time, and all are funded from crypto exchange Kraken in either $500,000 or $1 million deposits.

Domer says clues as to the whale’s identity comes from comments that Fredi9999, and another user called Michie, made on Polymarket.

“You can see the uncommon spacing around punctuation which strongly implies a French speaker. The French also use ellipses much more than other languages utilize them,” according to this analysis. “Fredi uses a mix of British and American English in their comments, sometimes using the ‘ou’ in a word like favourite and sometimes dropping it. They called math ‘maths’ which is the British version. All in all, AI thinks the writing/spelling/weird misspellings points to a Frenchman who has learned British English and spent time in America.” And then, in an apparent exchange over Discord, the user confirmed that he or she was French.

That this trader is French, or not, doesn’t really matter; this person’s outsized betting is the issue. This $25 million or so outlay in the comparatively tiny political betting market seems to be moving around stock, bond and currency markets that are orders of magnitude larger. Some $514 billion exchanged hands in the U.S. stock market on Wednesday.

The other question is whether betting markets should be given greater weight than polls. It’s true that, for instance, Trump was noticeably given less credit in polls in 2016 than he should have, and also performed better (though he lost) in 2020 than polls suggested. On the other hand, in the midterm elections in 2022 Democrats outperformed the betting market anticipation of a red wave. Domer, who says he has followed political betting markets since 2007, also points out that whales have backed losing Republican presidential candidates in both 2008 and in 2012.

The markets

U.S. stock index futures ES00 NQ00 were mostly stronger early Thursday, given a lift by Taiwan Semiconductor’s results. Gold GC00 surpassed but then fell back below $2,700 an ounce. The yield on the 10-year Treasury BX:TMUBMUSD10Y moved higher after the economic data.

The buzz

A flurry of economic data saw a better-than-forecast rise in U.S. retail sales in September, of 0.4%, as initial jobless claims fell by 19,000 to 241,000.

The European Central Bank meanwhile cut interest rates by a quarter-point as the eurozone economy struggles.

Taiwan Semiconductor Manufacturing Co. TSM — the contract chip manufacturer for clients including Nvidia — reduced some of the fears around the semiconductor market after forecasting fourth-quarter sales between $26.1 billion and $26.9 billion, well above the $24.9 billion forecast in a FactSet-compiled analyst poll. Its CEO said the AI revolution is for real.

Lucid Group stock LCID tumbled as the EV maker forecast heavy losses and planned to sell more stock.

After the close, Netflix NFLX reports results. Read preview of Netflix results.

Expedia stock EXPE climbed on a report that Uber Technologies UBER may bid for the company.

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Fannie Mae CEO says she has never seen a housing market like this before.

Meta fires staff for abusing $25 meal credits.

Tulsa has benefited from an experiment paying remote workers $10,000 to move there.

The chart

The ECB decides on Thursday, will likely join the net proportion of central banks whose latest move is an interest rate cut. “This move is pre-emptive in the sense that the authorities want to get ahead of a recession threat that hasn’t yet materialized. Pre-emptive easing is typically bullish for risk assets,” says TS Lombard strategist Dario Perkins. Perkins says the path ahead is full of pitfalls and the destination — a neutral level — is fuzzy. Labor markets will be key as to how this new easing cycle plays out, he adds.

Top tickers

Here were the most active stock-market tickers as of 6 a.m. Eastern.

Random reads

A rare copy of the U.S. Constitution is expected to sell for millions.

Police in a Cleveland suburb were called upon to attend to a giant, runaway pumpkin.

An office worker wins compensation after a boss refused to say hello to her three times.

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