Forecasting the Trump-Musk Breakup
A market-shattering fight in the lead-up to Manifest
Friends to Enemies
In retrospect, there had been omens and portents. But the suddenness of the breakup and its ferocity caught traders by surprise.
Markets on the relationship between Trump and Musk had been trending towards breakup territory for a couple weeks, after it was announced that Musk would be stepping back from an unpopular DOGE and returning to focus on the companies he leads.
How did we get here? In the 24 hours leading up to the spat, Musk had been outspoken against Trump’s “Big, Beautiful Bill” as it is handed off from the House to the Senate for consideration through the budget reconciliation process. Trump, who seems pulled between two wings of the party, had seemed quiet on the bill for a while, but eventually enough was enough. Trump fired off a criticism of Musk, implying that Musk’s real opposition to the bill was because of the end to federal EV tax credits. This escalated the disagreement, and soon, Musk was accusing Trump of hiding his presence in the Epstein files and even Trump seemed taken aback and unable to match the intense animosity of the fight.
Musk genuinely seems motivated by the federal deficit, but if he had bothered to check Manifold, he might have known that he was tilting at windmills. The kind of massive budget cuts that he hoped would be enshrined into law after his attempts at temporary budgetary reductions through the efforts of DOGE were never in the cards, with the market staying mostly below 1 in 4 odds since the election.
Musk also might be confused about the reconciliation process. The House version of the bill will get thoroughly papered over with amendments before going to the President’s desk, and while components of that bill might be quite unpopular, Musk could have moved behind the scenes to exert pressure, rather than viewing those components as foregone conclusions. In general, very little of the House version of a budget bill tends to survive through reconciliation. For example, despite the inclusion of a provision in the bill creating a 10 year moratorium on state regulation of AI, Manifold traders think there’s only a 5% chance that manages to end up in the final version!
It’s quite likely that Musk’s dramatic shift in tone might also be related to Trump’s move to pull his nomination for NASA administrator, Jared Isaacman. This move—as had his original nomination—caught markets by surprise. Indeed, the market on the next NASA administrator had been around 98% for months until the news broke.
The news has not gone over well among space circles, where Isaacman was very well respected. And it can’t have gone over well with Musk either, who is now threatening to cut off support for the International Space Station.
What’s Next?
Where do we go from here? Notably, Manifold traders still think that there’s around a 20% chance that the two get back on good terms:
However, forecasters also are fairly confident that a nickname is in the works:
Attacks on Musk’s companies through legal action or investigations seem plausibly imminent as well:
One vessel for Trump’s retribution might lie in FAA delaying SpaceX launches, one of Musk’s pet peeves.
And perhaps more serious for Musk on a personal level is the elimination of the possibility that he receives a pardon from Trump, leaving him out on the rocks during what could be a very litigious administration following the 2028 election.
In addition, his likelihood of a prison sentence in the next 3.5 years has spiked to 10%:
Musk has also flirted with the idea of forming a new political party. While markets did not see this political realignment coming…
…now that it is happening, markets seem to be taking Musk’s idea of starting a new political party seriously:
Manifest Imminent
While this will certainly give folks a lot to discuss this weekend at Manifest, there are of course plenty of other events, competitions, and activities that might occupy people’s minds:
Even if you’re not attending the conference, you can still occupy yourself by betting on the best quote to come out of the weekend, or perhaps whether Vox writer Dylan Matthews will survive the weekend without his pills.
There are also the Manifold awards to bet on, such as Funniest Market, Best Meme, or Best Trader. And of course, the poker tournament, for which professional player Nate Silver is only listed at 5% to win!
Happy Forecasting!
-Above the Fold