Donald Luskin of National Review Online examines curious behavior in the online futures markets for the presidential election. In what amounts to legalized betting, investors are able to buy futures options on a Bush or Kerry victory on the Iowa Electronic Markets or Tradesports.com.

Strangely enough, one investor has four times now massively dumped Bush futures, seriously depressing the market price. Within minutes, other investors have bought up the temporarily cheap options and restored the previous price level.

Why would someone do this? Well, for one thing, Wall Street traders, who believe a Kerry victory would be bad for the stock market, follow the election futures market. A low price for Bush options could depress the overall stockmarket, creating difficulties for Bush.

Luskin speculates that George Soros could be the one behind this maneuvering. Given his history of busting the British Pound and Malaysian Ringgit, that's not wholly implausible.

There's probably nothing illegal here. But an SEC inquiry might be useful to determine if the regulated financial markets are being manipulated.

Thomas Lifson   10 19 04