State of election markets: 401 Days

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With no debates there was nothing dramatic this week in the markets, but there was something quite interesting. The top establishment GOP candidates continued to hold onto about 60% of the likelihood of victory, but Jeb Bush ceded a lot of ground to Marco Rubio.

State of election markets: 408 Days

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The previous week was punctuated by Scott Walker dropping out of the race for the GOP nomination on Monday, September 21 and Marco Rubio taking up all of his likelihood for victory (and some).

The key date is Wednesday, September 16, which was the second presidential debate for the GOP. Walker never got his voice and he consequently dropped out of the race the following Monday. Rubio, who like Walker is an establishment conservative, began taking some of Walker’s likelihood right after the debate, but he really scaled upwards after Walker formally dropped out. Much of this is anticipation of him taking his: money, endorsements, and voters.

State of GOP post-second debate

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There were four tiers of candidates going into the second GOP debate. One candidate who is most likely to get the nomination, two candidates who are serious contenders, four candidates who are long-shots, and those candidates that are negligible.

1) Most likely: Jeb Bush was a clear winner last night as his stock rose from 35% to 40%. Anything that winnows out tested contenders such as John Kasich or Scott Walker is good for Bush.

2) Second tier: Marco Rubio outshined Donald Trump to take a lead in this tier. Carly Fiorina will likely steal some of Trump's poll numbers in the coming week and Trump needs to be really, really solid in the polls to maintain any shot of actually winning in the end.

3) Very Unlikely: Fiorina is still really unlikely win, but certainly lead this group now. Ben Carson will likely give polling to her, as well as Trump, and the outsider voter will solidify with Trump and Fiorina. Walker and Kasich both tumbled into the fourth tier.

4) Negligible: Ted Cruz, Mike Huckabee, Chris Christie, and Rand Paul now welcome Kasich and Walker.

State of GOP pre-second debate

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There are four tiers of candidates going into the second GOP debate. One candidate who is most likely to get the nomination, two candidates who are serious contenders, four candidates who are long-shots, and those candidates that are negligible.

1) Most likely: Jeb Bush has held onto this spot for all of 2015. His first debate was weak and he has moved down from around 45% to around 35%, but he is still the commanding favorite.

2) Second tier: Donald Trump has joined the second tier by surviving. The longer he lasts on top of the polling the more he will creep up in the probability of victory. Marco Rubio has been a clear contender to Bush for all of 2015 and a strong first debate (combined with Scott Walker’s less commanding performance) has solidified his hold within this slot.

3) Very Unlikely: Ben Carson, John Kasich, Carly Fiorina are all on the upward swing into very unlikely. Kasich and Fiorina are fueled by strong first debates and Carson by strong polling. Walker joins this group on the downswing.

4) Negligible: Ted Cruz, Mike Huckabee, Chris Christie, and Rand Paul.

Jeb Bush continues his slow decline as the most likely Republican nominee nomine. He is still over twice as likely as any other person, but he down close to 35%, from 45% just before the first Republican debate.

Hillary Clinton has slid to 70% likely to win the Democratic nomination for president in 2016. This is much lower than her peak of 85% in late June and early July. But, it is still incredibly high for a non-incumbent just after Labor Day.

Senate v. Electoral College

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The race for the control of the U.S. senate feels a lot like the race for control of the Electoral College (i.e., president), but there are a few crucial differences. First, the only thing that matters after the Electoral College convenes is who won the Electoral College, but minority party senators still get to vote for the next six years (and may tip the majority in the next election or sooner). Second, the Electoral College is 51 elections about the exact same two people, while senatorial elections are about 36 different sets of candidates. Thus, movements in the Electoral College are highly correlated, but senatorial elections are very independent.

Mitt Romney and Rick Santorum slugged it out tonight in Arizona, but the importance was all about Michigan. Santorum, as the frontrunner in the polls, was on the defensive for most of the night. Romney, as the actual frontrunner, was playing it safe. The strategy paid off for Romney. During the course of the debate, his likelihood of carrying Michigan rose from 66.2 percent, 15 minutes before the debate, to 73.6 percent, at the close of the debate. And, in correlation, Romney's likelihood of gaining the GOP nomination is up over 3 points on the day to 75.7 percent.

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As though New Hampshire wasn't already overprivileged enough in the broken primary system, the state may be the one to tip the scales in the general election to either party. According to my new elections model, which orders the states from most to least likely to go to the Republican candidate, a GOP win in New Hampshire gives the challenger 270 votes to Obama's 268. If the president wins, he carries the election with 272 votes to his opponent's 266.

Our model, which I developed with Yahoo Research economist Patrick Hummel by analyzing data from the past 10 elections, gives Obama a 59.4 percent likelihood of winning in the Granite State. This number is slightly higher than our prediction in our first post about our equations last week because the Real Clear Politics average of presidential approval polls has increased from 48 to 49 percent. The most likely outcome is still that Obama will win by 303 votes, carrying Ohio and Virginia as well as New Hampshire. As we noted before, however, elections are just as subject to chance as football games, and if the contest were held 100 times, we'd expect the Republican to win about forty times.

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We'll dip into what the model says in a moment, but first a note about models in general: there are a lot of them, from complex equations generated by nerdy academics (like the work by Patrick Hummel and I seen here) to funny coincidences like the Redskins Rule, which holds that the incumbent party keeps the White House if Washington's football team wins its last home game. (This is true in 17 of the last 18 elections!) Every year, some of these models are right and some are wrong, and the difference is often just luck. As a result, models get a bad rap as being very good at predicting the past and lousy at predicting the future.

But every election gives researchers more data to work with and a better idea of what works and what doesn't. Not all models are bogus just because many of them are. Our model combines powerful scientific algorithms with both real-time and historical data sources. We have examined the last 10 presidential elections and found that our new model would have correctly predicted the winner in 88 percent of the 500 individual state elections.

The following chart shows our predictions for each state in the general election, based on this model:

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