Last week’s election results were largely as expected. The President won reelection, Democrats still have a majority in the Senate, and Republicans control the House of Representatives. The only surprise was the brutally negative reaction of Wall Street.

Ed Mills of FBR Capital Markets says the risk of going off the fiscal cliff went up last week, in part explaining some of the negativity among traders. Mills says both sides have reason to believe they will prevail in a showdown based on the results, encouraging them to dig into their positions as the arguing and horse trading pick up steam into the new year.

Democrats can point to the President’s victory as evidence that the public is backing his “tax the rich” posturing. Republicans have exit polling data showing 63% of the public oppose new taxes, emboldening them despite Romney’s loss. Speaker Boehner and the President are making the right conciliatory noises, but without the backing of the rank and file it doesn’t matter.

Watch the full “Breakout” interview below: