Welcome back to Part 2 of a special two-part election 2020 thoughts in the market.

I'm Andrew Sheets, Chief Cross Asset Strategy for Morgan Stanley.

And I'm Michael Zeses, head of public policy research and municipal strategy.

Today we'll be talking about the upcoming U.S. election and what the implications of

divided government power could mean for the markets.

It's Friday, October 23rd at 3 PM in London.

And 10 a.m. in New York.

Mike, yesterday in this podcast, we discussed what it would mean if a single party had control over both the White House and Congress and what it would mean for the policy outlook.

Investors can go back to yesterday's episode to hear a full summary of those thoughts, but could you just quickly kind of summarize the key

takeaways again? Certainly in short there's a lot more of the agenda that each

presidential candidate is running on they can get done when their party also controls Congress than when they cannot.

And in particular, configurations where one party controls Congress and the White House

lead to substantially more fiscal stimulus than in divided government outcomes where there's risk of gridlock and in particular most of the actions that would probably be taken under such an

outcome would be relegated to things that the executive branch has the authority

to weigh in on mostly regulatory issues and foreign policy issues.

From a policy perspective, how would you see the next four years under divided government,

whether or not it's vice president Biden in the White House, but Republican

control of either or both chambers of Congress, or President Trump winning re-election, but

Democrats controlling either or both chambers of Congress.

What do you think that that looks like in terms of expected policy?

Yeah, I actually think they're quite different from the perspective of the policies that

investors are paying attention to right now that they think are most critical to the market.

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