Palin Power

Sarah Palin's emergence onto the national scene gave a shot of life to John McCain's presidential bid. But the Arizonan might not be the only Republican senator who stands to benefit from the Palin boost. By rallying the conservative base, which had previously been just lukewarm to McCain and seemingly un-enthused about this year's race in general, Palin may have done as much for Republicans downballot as she has for the top of the ticket.
During the week of the Democratic National Convention, traders were putting Democrats' chances of winning a 56-60 seat majority in the Senate at nearly 70 percent. In the two weeks since Palin was announced as VP, that number has dropped precipitously to just 34. Traders are now placing their bets on a modest gain for Democrats; the contract for a Democratic majority of 51 to 55 seats is currently trading at 60.

Our Best 3 Traders in This Month

Dem Drama

The Democratic Party wants to pull off a flawless convention in Denver this month, but they just can't seem to put the past behind them.
- Bill and Hillary Clinton are both slated to speak in Denver, but questions persist about whether the former standard bearers of the party have whole-heartedly embraced Barack Obama. Traders put Clinton's chances at snagging the VP spot at just 5.5 percent now, down about 10 points from late July. Her most ardent supporters are on to the fact that Obama seems increasingly unwilling to share the ticket with his former rival and their pent up frustration is starting to bubble to the surface again, with some planning protests for Denver. Meanwhile, emails, memos and schedules from Hillaryland, dug up recently by Joshua Green of the Atlantic, only serve as a reminder that there was little love lost between Clinton and Obama as recently as several months ago.
- But if Clinton's chances for a top spot in an Obama administration are looking dim, the light has gone completely out for John Edwards' political future. His admission to having an affair with a woman who was, at one point, a paid staffer and to initially lying about it has squashed any chances the former vice presidential nominee had for reprising his role on the bottom half of the party ticket. Traders now put Edwards' VP chances at just above 1 percent.
- The real question is how all of this is affecting Obama's chances at ultimate success in November? Traders see John McCain gaining a little bit of traction against the Illinois senator, as his contract to win has risen from 30 at the beginning of July to 37.3 this week; but Obama still remains the overwhelming favorite at 60.4.

McCain's Right Hand Man (Or Woman)

Veteran Washington journalist Robert Novak dropped a potential bombshell inside the Beltway on Monday when he reported that John McCain might use a vice presidential announcement to lure media attention away from Barack Obama's world tour this week. So far the presumptive Republican nominee has kept mum on who he will pick to share the ticket with him, but rumors are certainly swirling. So who do traders consider the best bet for McCain's No. 2?
-- Mitt Romney's stock has risen consistently since the beginning of the month and, with his contract at 36, is so far in first place among traders. There's no doubt the once icy relationship between McCain and Romney has warmed considerably and, with Romney's strong economic credentials, many GOP insiders see him as the perfect compliment to McCain's national security strengths. The downside: Romney's propensity to change his position on a slew of issues.
-- Minnesota Gov. Tim Pawlenty rates second among traders at 15. After seeing a peak in his contract in late June, Pawlenty's fortunes seem to have faded in July. But a report that McCain hinted this week that Republicans were "really going to like" Pawlenty has translated into huge media buzz and a spike in traders' interest in the several days.
-- McCain was scheduled to fly to Louisiana on Thursday (Hurricane Dolly forced him to cancel the trip), but Gov. Bobby Jindal's star no longer appears to be on the rise. In fact, Alaska Gov. Sarah Palin has eked him out for third place among traders. A political setback at home perhaps hurt Jindal's chances at national office -- for now at least -- and many believe he will be a stronger candidate once he gains a few more years of experience. Palin, meanwhile, is suffering from her own political firestorm this week, as the Alaska state Senate is calling for an investigation into her firing of the public safety commissioner, allegedly because he would not fire a state trooper who had been through a bitter divorce with Palin's sister.

Feeling Blue?

Both Barack Obama and John McCain are claiming the title of underdog in the presidential contest, but it is clear which party traders believe has the upper hand heading into November.
-Obama's contract rests just below 64, while McCain has dropped a smidge to 31. This despite the backlash from the left in recent days over Obama's purported shift to the center, particularly on the issue of Iraq. But McCain has seemed unable to capitalize on any Obama missteps, as he continues to search for a consistent message about his candidacy. In fact McCain, who got a three-month head start on the general election, just last week instituted another shake-up of his staff, putting Steve Schmidt in charge of day-to-day operations.
-Meanwhile, traders are also betting on a strong showing for the Dems in House and Senate elections. The contract for Democrats to reach 56 to 60 seats in the Senate is trading at 41, while 51 to 55 seats garners a 42. On the House side, the vast majority are betting on Democrats emerging from November's contest with between 240 and 260 seats.
-Overall, the contract for the Democrats to win the White House and majorities in both houses is trading at 63. This indicates just how poisonous the environment is for GOP incumbents this year, as the economy continues to tank and President Bush's approval ratings drag at about 30 percent.