The Aftermath of the President's State of the Union speech: The Dow is down, but what do the prediction markets say?

Following President Obama's State of the Union address yesterday, the Dow is down by over 1%:

The Industry Standard on the other hand belives that prediction markets may be more optimistic on the state of the economy. Their prediction, Dow Jones rises to 8000 by March 20, 2009 is trading favorably with the current consensus at 65%.

Traders at Hubdub, on the other hand, are less optimistic. Most trades there are betting that the Dow will close below 7000 before it goes above 8000. Interestingly, few think that it will remain in place (likely partially the product of longshot bias):

At Intrade, the money is on the Dow falling below 7,000 sometime this year:




On balance, the reviews are fairly negative. And the Dow itself is the one that really counts.

Comments

[Tim]

The value of the Industry Standard prediction seems to have taken a bigger hit after Obama's speech than the DOW. From the graph it looks to be roughly 5%.

[Melody]

Tim--You're right and that's a good point. 65% is still pretty optimistic, though, especially for a turn around to happen so soon (<1 month).