Welcome to another week! For the new readers: every week I comment on the top prediction markets—selected by volume, volatility and surprising resolutions—across (geo)politics, elections, macro, tech and science. Markets first, news through their lens, not the other way around.
Let’s see what changed in the world!
Weekly Outlook
US Inc.
Midterms
Over last week we saw a Democratic sweep become the clear favorite on the Balance of Power market, breaching the 50% threshold. The Senate market is still priced at a coin flip, though—if a full sweep costs the same as the Senate alone, traders have the House at near-certainty.
Prediction markets are slowly converging with Nate Silver’s FLIPR model, which has shown a slight Dem advantage since its inception:
The trend is also visible on Adjacent’s SENR Index, which is down on the week:
At 100.62 points, it shows that individual Senate race markets are aligned with the wider view.
The Fed
Jackson Hole. I expected Warsh to be vague, but he decided to tease a hike instead. However, after his introduction, he was much more balanced. His comments around inflation were no different from what he presented during the last two FOMC press conferences.
Warsh may try to abandon forward guidance, but he cannot escape the fact that every communication out of the central bank is treated as monetary policy. There’s more to policy than the interest rate—holding rates stable with a hawkish outlook produces a different market reaction than a purely balanced outlook or a dovish suggestion.
In my opinion, the market reacted rather sharply to a speech that introduced no surprises—I accumulated some No hike shares during the repricing.
The Americas
Brazil Presidential Election
Flavio Bolsonaro is getting closer to Lula with every poll:
And the raw numbers understate it: AtlasIntel’s +10 came from an online panel that forced undecideds to commit, while Quaest and Datafolha still carry 10-14% unallocated. I expected this election to get more volatile as we approach September, but I didn’t see Bolsonaro gaining so much ground in just two weeks.
For now I’m on the sidelines, but it might change in the coming days.
US-Canada
In the north, this week was dominated by Trump’s pettiness. He renamed Lake Ontario by an executive order and Google Maps quickly obliged.
I may not like it, but this is something that plays very well with his base, something he needed very much since the Iran war cost him a lot of trust with MAGA.
Asia
No interesting markets to report.
Middle East & Africa
The Iran War
Bessent’s economic D-Day announcement made little waves and amounted to nothing substantial. The week was quiet up until last night, when America struck southern Iran to eliminate launchers. Iran retaliated, sending missiles over the Gulf States and Jordan.
As with recent kinetic action, Israel neither participated nor was it the target:
This is the first US strike since July 29, 33 days ago. A return to hostilities bid up the US invasion market, but it’s still a remote possibility:
However, the action did impact some of the long-term markets. Both the US blockade market and the SOH traffic normalization market dipped:
Long-term peace talks markets took a bit less pain, but they are still down:
Overall, the developments in the last two weeks are hardly optimistic. But at the same time, they are barely hawkish… We’ve been in a somewhat neutral state, which begs to be disrupted by the coming midterms.
I have high hopes for developments in the next 10 days—if I don’t see signs of progress, I’ll reassess my thesis.
The Houthis
On the other side of the Arabian Peninsula, the Houthi blockade market is flat despite major volume.
It’s probably the most retail-heavy market at the moment—price clearly favors going on the No side, while the Yes side enjoys all the retail flow thanks to constant tensions.
Israel
Israel is a bit on the sidelines when it comes to the recent escalations. It seems to be busy with the coming Knesset election. We’ve seen Netanyahu close some of the gap to Eizenkot, but overall, the latter is still a clear favorite to win.
It’s all because Ofer Winter announced his entry into the race. The ex-IDF brigadier is diluting the right-wing vote, reducing the overall chance of anyone having a majority.
Europe
The Ukraine War
The Ukraine war is the one escalating the most right now. The CIA director’s visit to Moscow sparked a lot of drama on the old continent and many expect an imminent escalation. Some even expect a NATO-Russia clash.
However, I doubt anything will happen pre-Duma election:
With a month out, there’s plenty of time to collect signals and prepare a forecast—I’m planning a deep dive for the second half of October!
Iceland
Outside of wars, Iceland held a referendum on resuming the EU talks. Traders gave a slight advantage to the Yes side, which ultimately lost—Icelanders voted 52 to 48 against resuming the talks.
Other
AI
In AI, the two top markets are about Anthropic. The former, on the best AI model this month, is all but decided. The latter, on the release of the next Mythos-class model, is a toss-up:
Traders expect a release as soon as today—I do hope that Claude-speak is fixed in the update.
Business
Lastly, some news from business. The market on PayPal being acquired by Stripe fell to bond territory after reports that the deal fell through. M&A markets tend to behave like biotech stocks—a high entry barrier due to information complexity and scarcity combined with wild swings.
I need to engage more in these markets—my history with them is rather good.
Wrap up
That’s all for today! I don’t have a deep dive in mind for this week. Instead, I’ll publish a forecast update towards the end of the week to capture all the developments in the running forecasts.
Additionally, I’m doing a slight adjustment to the videos—they’ll come out on Fridays and have more insight about market moves throughout the week.
Stay strong and see you soon!
This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.