Usually the markets welcome Republican gains because they are more in-sync with the economic agenda, the Republican party. But this time, big Republican gains might be more of a negative for the markets. So it's really just that simple. I think if you got to 60 Republicans you'd probably start to assume your gonna receive some kind of tax cut next year, so that would be a negative for the bond market, but probably a positive for the stocks. One thing that may have a bigger impact on the policy debate, next year than the election results is the course of the economy.
Most economists expect the economy to slow down.
If it slows down a lot, you're going to see voters demanding more of politicians in the way of economic policy. You haven't really seen that in a couple of years. If you get a slowing economy but still a rising trade deficit along with rising unemployment, I think trade policy can be more important over the next 12 months than it has been over the last 12 months. And depending on what the makeup of the new Congress is, it will react differently to calls for perhaps more government spending if there is indeed a downturn. They were responsive to that argument.