Above the 49th Parallel
Carney carnage and rising tensions in Kashmir
Canada
Despite a strong start to the evening in Atlantic Canada, the Conservatives failed to pull out a victory. Last night capped off a stunning comeback for the Liberals and Carney, who were given 1% odds only a couple months ago to hold onto leadership. Early in the night, the odds rapidly moved to near-parity, as returns from the Atlantic provinces began to arrive that looked unfavorable to Carney and the Liberals. However, after the third tranche of results came in, shortly after polls closed in much of the country around 10pm ET, the results were clear:
Carney (in red above) will be the next prime minister of Canada, thanks to a party willing to cast aside an unpopular Trudeau, and a little help from the extreme rising unpopularity of Trump’s brand of politics in Canada.
Adding insult to injury, Poilievre will end up losing his own seat, despite just 10% odds to do so on the eve of the election.
The election was slightly closer than markets anticipated, with Liberals winning a plurality but likely falling short of an outright majority in Canada’s coalition parliament once vote-counting is complete.
Perhaps learning an important lesson from American elections forecasting, Canadian election models on 338Canada and CBC tried very hard to reflect the range of uncertainty in the possible outcomes. Manifold looks like it came out ever-so-slightly ahead of the pure polling models, at least to a vibes-based approximation. Manifold gave a couple percentage points-higher odds to a Liberal plurality (but not majority), and gave marginally lower implied odds to Carney’s victory, which seems wise after a fairly close election with a small polling error favoring Poilievre. While the eventual outcome certainly fell within the range of error of most forecasts, the Conservatives managed to claw back a few more seats than the median pure-polling forecasts. Despite all this, it looks like a victory for polling and for the prediction markets for trusting those polls.
Unfortunately, this looks like curtains for the long-running Tumbles Financial Complex, which was heavily leveraged into the outcome of the Canadian election. However, there’s always hope for a bailout:
Kashmir
On the other side of the world, tensions are rising along the Line of Control in Kashmir. After the deadliest terror attack in India since 2008’s Mumbai Attacks, a rapid escalation between the governments of India and Pakistan has commenced. Both countries have recalled diplomats, India has threatened to withdraw from the Indus Water Treaty, governing an important shared resource, and border skirmishes with live fire have begun.
Many think that India might be laying the framework for a larger campaign against Pakistan, with potential goals being territorial gains across the Line of Control or the initiation of a broader conflict.
Manifold bettors are slightly more skeptical, giving only a 24% chance of a formal declaration of war…
…an 18% chance of a conflict leading to a high amount of casualties….
…and a 21% chance of an escalation involving airstrikes over the next week.
The Iberian Peninsula
The power outages in Portugal and Spain appear to not be a cyberattack, despite early rumors. However, Manifold traders are also not entirely convinced by the explanation of an “atmospheric phenomenon” either, assigning more weight to some form of human error and outdated grids.
It appears that thankfully, power has been mostly restored, so that the people of Spain can get back to training for the 2026 World Cup and building out their booming tourism industry (which is sure to be helped by reduced European tourism to the US).
Roundup
The TIME Person of the Year race is starting to heat up, with “AI”, the new Pope, Elon Musk, Trump, and “The courts” being the early favorites:
It’s unclear how the TIME POTY market would resolve if Donald Trump becomes the new Pope, however. Manifold traders were caught by surprise by Trump’s suggestion of himself for the role:
Lebron James looks set to pass Michael Jordan as the GOAT in the eyes of current NBA players, according to the Athletic poll that is set to drop soon:
Deepseek R2 will likely be coming out over the next month or two, so keep an eye on this market if the AI race is your cup of tea:
Happy Forecasting!
-Above the Fold