South Korea announces Martial Law and Biden pardons his Son

Covering the 2 shocking events which the markets did not see coming

I hope you had a wonderful Thanksgiving, filled with meaningful moments creating core memories with your family. That said, if the conversation around the table devolved to politics I hope it moved on quickly before any relationships were tainted.

There is one family’s Thanksgiving dinner in Nantucket that was certainly full of political discussion which won’t be quickly forgotten — The Biden family dinner. Joe Biden’s actions since the election have shown he has no plans to sit back during his final weeks in office. The most recent of which was a presidential pardon for his son Hunter Biden.

Why was this such as surprise?

Not only was this pardon a surprise to the market, but the nature of the pardon has political pundits wondering whether this could set a dangerous precedent for future presidential pardons.

Joe Biden has consistently asserted that he values the importance of judicial independence and months ago informed ABC in an interview that he has ruled out pardoning his son. The market saw no compelling reason to doubt this and has been steady in the 20-35% range. It initially saw a small bump by 5% when the democrats lost the election, but began declining after White House press secretary Karine Jean-Pierre reaffirmed on November 7th that there was still no intention of pardoning Hunter Biden.

This pardon is also raising eyebrows due to its broad language which pardons Hunter Biden for all crimes committed since 2014. Typically presidential pardons only forgive a specific crime, not all crimes during a time period including those not even yet surfaced. Only on one other occasion has an all-encompassing pardon been issued which was to Richard Nixon in 1974.

As reported by the New York Times,

“Hunter Biden likely would not have qualified for a pardon recommendation under the criteria used by the Justice Department’s Office of the Pardon Attorney, which is tasked with identifying and vetting worthy clemency recipients. The office mostly recommends full pardons for people who have already served their sentences.

Hunter Biden has not been sentenced, let alone served his sentence.”

While the market as a whole did not anticipate events unfolding as they did, congrats to the individuals who did and put their money where their mouth is.

What impact will this pardon have?

Many believe Biden’s latest actions are corrupt and are claiming this will tarnish his legacy. Others believe this pardon could set a strong precedent that Trump can now leverage to his advantage to pardon allies.

I was planning to highlight various market movements to show what odds have updated following the pardon announcement, but most markets remain unchanged.

There is still a 90% chance that Trump pardons someone convicted from January 6th and Manifold’s market on whether Joe Biden will pardon Trump has remained at 4%.

The only significant movement in any prediction market I am aware of is Polymarket’s “Will Joe Biden Pardon Trump?” which jumped from 4% to 10% following the news. It has since returned to the range it was trending pre-pardon. I continue to be surprised by how aggressively Polymarket odds tend to react to the news. During the election, this was a boon to how people perceive Polymarket but I am skeptical that the news merited a 2x increase in the odds of this particular market.

South Korea’s President Yoon Suk Yeol faces impeachment

The other news no one anticipated was the surprise announcement by South Korea’s president last night when he announced emergency Martial Law to protect the country from North Korea. Tension between the neighbouring countries has risen over the past weeks with accusations of drones crossing the border and both countries restarting hostile measures such as loudspeaker propaganda. However, there hasn’t been any acute escalation making the president’s actions even more bewildering to onlookers.

Just hours after the president announced martial law, he decided to lift it. This followed backlash from protestors and a unanimous 190-0 vote by lawmakers present at a meeting called by the opposition party to block the president’s actions.

Manifold’s markets now believe President Yoon has a 76% chance of being impeached in the next month.

Yoon is only halfway through his 5-year term in office and South Korea’s next general elections are due to take place in 2027. However, the market thinks there is a very good chance he won’t even make it to the end of next year.

Unfortunately, this market was created in response to the news so we don’t have a good indication of what the odds would have been prior to the news. But if we assume the baseline odds of impeachment were relatively low, we can infer that his actions over the past 24 hours have led to at least a 65-75% higher chance of his presidency terminating next year (take this with a grain of salt as there are a lot of variables to consider and I haven’t spent enough time researching to know what the actual baseline odds were).

While we don’t have markets we can refer to track changes in presidency odds, we can track how these events have impacted the market odds on a direct clash. The news caused the odds to double from 8% to 16% (ignoring the spike from one overzealous trader).

These odds will continue to be higher than the year’s baseline in anticipation of further news. If nothing happens over the next few days you can expect them to return to about 8%, especially as the closing time draws near.

Thanks for reading.

Now that the election cycle is over we hope to continue with regular newsletters, however, they will likely be shorter focusing on just 1-2 trending events and their markets.

David Chee