'Risks and opportunities'
If Republicans retain control of Congress, they'll likely continue to pursue many of the issues they are currently working on, Savercool said. At the top of their agenda: further deregulation, a follow-up to the recent tax reform bill, border security improvements—including funding for the wall—healthcare reform, and possibly a deficit reduction package.
For markets, there are "risks and opportunities" that come with Republican control of Congress, Ryan added. For example, "Tax reform 2.0" would likely add short-term stimulus and boost equity markets, but unless it is paired with budget cuts or entitlement reform, new tax measures could also push the deficit higher, putting upward pressure on long-term government bond yields.
Would gridlock be good?
If Democrats capture one or both legislative branches, the chances of gridlock are significant, Savercool said.
But while government shutdowns are likely under a Democratic Congress, markets have historically shown very little reaction to such episodes. While there may be short-term volatility, Ryan said, in the past "if it’s a shutdown without a risk of a debt ceiling breach, the impact has actually been pretty limited."
The prospect of impeachment
Chances are slim of President Trump actually being removed from office through impeachment, according to CIO. While a Democratic-controlled House could initiate impeachment proceedings, it's highly unlikely Democrats could muster enough votes to convict him in the Senate.
Even if Democrats do pursue impeachment, the markets' reaction could be muted. Markets seemed not to blink during the Clinton-era proceedings. In fact, once it became clear he would not be removed, markets continued to grind higher through the end of Clinton's second term.
"As long as it's not disruptive and a removal from office, the markets will begin to focus on the fundamentals," Ryan said. "While impeachment is something that could certainly add to market anxiety and volatility, I don't think it's enough to wind up tripping up this bull market."
To learn more about what the election could mean for markets, try CIO's interactive tool and read the full report.
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