The results are in and the Republicans took back control of the Senate while gaining more seats in the House to a record setting level. The current President’s lame duck term still means there are two years left and he’s got a pen and a phone. What might we see in the economy given the shift in power?elections are over Well, if yesterday was any indication, and granted one day doth not a prediction make, but both the Dow and the S&P 500 lofted to record highs.

 The DJIA closed up 100.69 yesterday to finish at 17484.53 while the S&P 500 climbed another 11.47 to close at 2023.57 and both are extending their gains today. Meanwhile, the bellwether Fannie 3.5 coupon closed down -1/32, this just after losing another  -1/32 yesterday. 30 year mortgage rates have drifted a few bps above and below the 4.00% mark for the past couple of days.

There really won’t be any honeymoon for the new Senate and Congress members, there never has been in retrospect. That phenomenon is usually reserved for a newly elected President. But what you might expect is the House and Senate getting together feverishly working to send bills to the President for signature. They may not be the types of bills the President is willing to sign but with the Senate and House on the same page means a bill won’t be passed in the House only to be tabled by the Senate.

What we may soon see is a fix to the current tax code that keeps corporate profits overseas instead of being taxed here when the revenue is wired back to the States. So-called income repatriation could bring billions back to the economy yet due to current corporate tax code it makes sense for businesses to keep the money parked where it’s earned.