Michele Bachmann's Odds on Intrade Rise, Establishment Candidates Fall

It has only been a few weeks since we last reviewed the odds on the Intrade markets, where investors can lay wagers on the 2012 Republican nomination. Intrade's page on the primary may be found here. Elephant Watcher offered a skeptical view of the predictive power of Intrade in an earlier post. But Intrade remains a useful tool, as it reflects the conventional wisdom of the Washington establishment.

Since the last time we looked at Intrade, little has changed for Mitt Romney. He's still in the lead, sitting at 35.6%, high above all competitors. Rick Perry has settled into a distant second at 15.9%, which is also about where he was last time.

The latest candidate to rise on Intrade--and it seems candidates take their turns doing so--is Michele Bachmann. She is buoyed by her recent bump in the polls, and stands at 15.1%. She's now in third place. Only Romney and Perry join her in the ranks of those getting double-digits.

The victims? Establishment favorites Tim Pawlenty and Jon Huntsman. Intrade gives them 8.7% and 7.1%, respectively. This is quite a drop from their positions in May, where Pawlenty had 25% and Huntsman had 17%. Perry and Bachmann have both hurt Pawlenty, who is (correctly) perceived as a competitor in Iowa.

It's the Iowa calculation that has a heavy influence on the Intrade odds. Intrade now has a market for investors to bet on the winner of the Iowa Caucus. Intrade investors give Bachmann nearly a 50% chance to win that contest. Pawlenty is only at 7%. Romney and Perry are both given about 13%. Meanwhile, the New Hampshire market shows Romney winning handily at 65%.

Intrade investors appear to be quite responsive to early polling--but only where Bachmann's concerned. So far, there's only one poll showing Bachmann doing well in Iowa, and she's not even in first place. Poor Romney, who leads Bachmann by one point in that poll, is given only a 12.9% chance of winning Iowa on the Intrade market. The investors (rightly) sense that Bachmann's support is a sign of vulnerability for Romney in Iowa. Iowa's voters are looking for a reason to vote for someone besides Romney.

Meanwhile, Herman Cain is only given a 1.5% chance of winning Iowa, which explains why he's fallen so far in the overall nomination odds: down to 1.9%. Intrade has put its money on Bachmann (or Perry) winning the Tea Party's support.