Whose right? The markets or the pollsters?

Rudy Giuliani has been leading the race for the Republican presidential nomination for several months now with a clear lead in all the national polls. The RCP rolling average has him leading McCain by 5.8% , well outside the margin of error.

But the markets don't agree. The latest prices from the Iowa Exchange (below) has him falling behind John McCain into third place, they both still trail the markets equivalent of RON.




So who is right? Well I would always tend to trust the people who are willing to risk their money. But more importantly what has caused this change in sentiment?

For Giuliani the news that he gave money to Planned Parenthood an abortion provider (its one thing to be pro-life in a Republican primary but to have given money to abortionists is potentially the kiss of death) and a less than stellar performance at the first Republican debate goes some way to explaining why the gloss has come off his price.

But what is behind the sudden surge to McCain who was dead last only two weeks ago? I have no real explanation. True his media coverage has improved following a rough opening three months to the year (culminating in his poor showing in 1st quarter fund raising) but mainly because the pack have switched their focus to the new front runner rather than McCain himself making waves. Something may be moving under the surface, either in terms of the professionals seeing signs of McCain's camp getting their act together or of a storm brewing for Giuliani . Who knows. It will be interesting to watch how this race develops.