Before we get started today, you can’t say Election Insider - The Rundown didn’t see this coming…

This morning, we read that Trump’s first choice for Defense Secretary, Pete Hegseth, might be getting his walking papers. Trump’s rumored alternate? Florida Gov. Ron DeSantis.

But here’s something we didn’t see coming…

In South Korea on Monday, the Democratic Party (DP) slashed 4.1 trillion won (South Korea’s unit of currency) from President Yoon Suk Yeol’s proposed 677.4 trillion won budget.

This power play was aimed to curb Yoon's influence and highlight his administration's limitations. At the same time, the DP could “push back against the view that it has loose-spending tendencies,” Bloomberg says.

Source: Bloomberg

Yoon's party, the People Power Party (PPP), argued budget cuts could cripple the government and hinder the country's ability to respond to trade challenges — especially with Donald Trump's return to the White House (i.e. tariffs).

At stake? Critical investments in semiconductor innovation, vital for South Korea's export-driven economy.

Thus, grappling with a fierce budget battle, President Yoon did something not done in more than 40 years…

Your Rundown for Wednesday, December 4, 2024...

An Uncertain Future for a Key U.S. Ally

During a televised address Tuesday at 11 p.m. in Korea, Yoon accused the Democratic Party of being “anti-state” — and even aligning with North Korea — arguing that emergency martial law was necessary.

The declaration sparked immediate backlash, even from Yoon's allies. Meanwhile, DP leader Lee Jae-myung condemned martial law as unconstitutional while warning of economic collapse.

(Soon after Yoon’s declaration, in fact, the won and South Korean stocks cratered. They’ve since regained some of their losses.)

At the same time, South Korea’s legislative building, the National Assembly, was sealed off. But around midnight on Tuesday, lawmakers scrambled to enter the building for an emergency vote, in spite of police barricades and a military presence.

“All 190 lawmakers who participated in the vote supported the lifting of martial law,” the AP reports. “Television footage showed soldiers who had been stationed at parliament leaving the site after the vote.”

Afterwards, Yoon himself backpeddled on martial law… But the damage was already done.

President Yoon’s tenure, since he was elected in 2022, has been marked by plummeting popularity. And his agenda has hit a wall in the DP-dominated parliament.

Plus, Yoon's refusal to allow independent investigations into scandals involving his wife and other officials has further inflamed tensions.

Tensions have only intensified in the last 24 hours with DP and PPP legislators calling for Yoon to resign… or suffer through the impeachment process.

At the time of writing, the Biden administration says they’re taking a wait-and-see approach to the situation in South Korea. President-elect Trump has yet to comment either.

However, Yoon congratulated Trump on his election in November. In a 12-minute phone call, the two agreed to meet soon to discuss North Korea, security cooperation and potential economic challenges.

The Biden administration's relative silence on this critical issue affecting a key U.S. ally is telling. In contrast, President-elect Trump's prompt engagement with Yoon suggests a more proactive approach to U.S.-South Korea relations.

It remains to be seen whether Trump will be engaging with Yoon or another South Korean leader hereafter.

But with nine major U.S. military bases in the country, South Korea is strategically important due to its geographic location, strong military alliance and role as a democratic bulwark against North Korea and China in the Indo-Pacific region.

Market Rundown for Wednesday, Dec. 4, 2024

S&P 500 futures are up 0.30% to 6,080.

Oil is up 0.20%, just over $70 for a barrel of West Texas crude.

Gold’s at $2,670 per ounce.

And Bitcoin is up 0.20% to $95,700.