The outcome of the Robert Mueller report, on possible Russian interference on U.S elections, should dictate pace in the equity markets, this week. For the past two years, the markets have experienced wild swings amidst chatter of possible Russian collusion on the hotly contested 2016 Presidential elections.

Mueller Report Ramifications

Depending on the findings of the Special counsel report, the markets could rally or come down tumbling. The last thing that the market need is findings indicating that President Donald Trump did collude with the Russian to interfere with the election.

“A report that’s damning toward President Trump would create a great deal of market uncertainty, put the administration’s tax and regulatory agenda at risk, and potentially encourage the president to take actions unfriendly to the market in an attempt to distract the public from the report’s contents,” said Stephen Pavlick Renaissance Macro Research.

The probability of the market collapsing is high should the report indict the president and his administration. For the longest time, the market has priced in suggestions there was not so much collusion. If there were any, it would already have come out.

A report that comes out with information so damning would go a long way in casting doubt on the current administration tenure. Such a report would fuel the impeachment drive that appears to have gone cold in recent months.

Markets Uncertainty

The market reaction would be bad and create a lot of uncertainty should the President be found guilty of wrongdoing. Such a report would put the tax and regulatory agenda, already approved, at great risk. Conversely, the president may be forced to react as a way of countering the ramification of such an outcome.

President Trump may be forced to react with tariffs on Chinese goods and impose auto tariffs on the EU as a way of shifting attention from any ramifications of the Mueller report. These actions could result in spooking the markets and trigger sell-off of counters.

The last thing that the markets need now is impeachment proceedings. The current administration policies have so far triggered rallies in the markets. Impeachment of the president would put such policies at great risk, as the Democrats would use the opportunity to their advantage ahead of the next general election.

Business-friendly policies by Trump administration is one of the reasons why the markets have continued to rally over the past two years. According to experts and strategists, unified Democrat government would have spooked the markets given the policies being touted by some of the candidates gunning for the Party’s nomination.

Elizabeth Warren and Bernie Sanders have so far touted policies if elected president, which would not be friendly to markets. Their policies on financial transactions as well as increased taxes on the wealthy could hurt stock valuations if implemented.

U.S. Stocks Sell-Off

U.S. stocks ended the week lower as of the close of business on Friday after rallying in response to a dovish outlook by the Federal Reserve. Major benchmark indices came down tumbling as investors reacted to growing fears of recession that sent bond prices rallying.

The Dow Jones fell 460 points to close at 25,502 as the S&P 500 plunged 1.9% with the Nasdaq Composite, which has been bullish in recent weeks, faring worse on plunging 2.5%.

Recession chatter has been gaining momentum in recent weeks in the wake of the European Central Bank issuing the red flag about slow growth. Chinese economy resorting to slow growth has also raised concerns that the U.S economy could also catch a cold, sooner than later.