Intrade market on the 2012 Republican nomination, the race has taken a new shape. According to Intrade's investors, the primary has become something of a two-man race: Mitt Romney versus Rick Perry.
Romney is still in the lead with 33.7%. But he's only just ahead of his nearest competitor now: Perry has jumped up to 28.5%. Previously, Romney had enjoyed a very comfortable lead; now, it's a race. The odds have been influenced by continued reports from Texas that Perry does intend to run for president. If and when he does officially get into the race, it's likely that Perry will increases his chances even more.
The other shift in the dynamic is how Intrade investors view Michele Bachmann. A few weeks ago, she peaked at over 18% and was tied for second with Perry. Now, her odds have shrunk to 9.1%. A couple things have happened. First, negative press about Bachmann has diminished the perception that she is a credible candidate. Second, the character of the average Intrade investor has reasserted itself. Intrade investors tend to reflect the conventional wisdom of the Washington establishment. They may hope someone as unelectable as Bachmann wins the nomination (to help the Democratic Party's chances of retaining control of the presidency). But they tend to have a bias in favor of traditional, establishment candidates.
Thus, Bachmann--even in spite of her polling of late--has fallen to a second-tier, which she shares with Tim Pawlenty and even Jon Huntsman, who are at 6.0% and 8.0%, respectively. Intrade investors are more likely to think of Perry, a three-term governor of a major state, as a real contender. The Intrade market for the Iowa Caucus reflects the change: Bachmann still has decent odds at 41.0%, but Perry has more than doubled his previous odds to 30.0%.
Though the wisdom of the Intrade investors is easy to critique, they must be given credit for doing more than simply looking at the recent poll numbers. They correctly perceive the potential in Perry, and they show signs of understanding Bachmann's challenges.