Politics could be the catalyst that touches off a bear market.

Over the past two years, investor optimism surged, tracking a global bull market in equities with little sign of flagging positivity, however, Greg Valliere, chief political strategist at Horizon Investments, outlined several scenarios that could wipe the smiles from investors’ faces.

“It seems like this rally is going to go straight to the sky,” said Valliere on Tuesday at the 2017 Schwab IMPACT conference in Chicago. “Maybe we’re getting late in the cycle, and we’re at a point where we’re all adults, and we need to think about what could possibly go wrong.”

Addressing the 2,000 advisors in attendance, Valliere noted that his fellow presenters at the conference were acknowledging fundamentally sound markets tracking growing economies, but that political risk, whether it manifests as changing domestic policies, or deteriorating international relations, or something else, should be included in investing assumptions.

According to Valliere, six scenarios could derail the bull markets.

No. 1 – Failure Of Tax Reform

While most observers believe that some kind of tax reform is passed within the next six months, Valliere is not completely sure that the tax reform plans proposed by Congress and the White House will become law.

“It will pass the House in the next 48 hours, no question, but then you go to the Senate. As someone famously said, dealing with the Senate is like herding cats, it’s just very hard to get things done,” he said, noting that three negative Republican votes were all it took to scuttle repeated attempts to repeal the Affordable Care Act.

Senate mavericks like Rand Paul of Kentucky, Susan Collins of Maine and John McCain and Jeff Flake of Arizona could alter, delay or kill attempts to reform the tax code, and the current bill is likely to raise the ire of Republican deficit hawks: The current configuration of tax reform would be unacceptable to some congressional Republicans because it would add an estimated $1.5 trillion to the national debt over the next decade, said Valliere.

In any case, legislative procedure would require members of the House and Senate to conference to create a uniform version of the bill, a process that Valliere said could extend into the new year.

No. 2 – Failure To Address The Budget

Valliere marveled that few observers were discussing the failure to pass a budget, despite the presidency and both houses of Congress falling into Republican hands. Instead, when Democrats and Republicans compromised to create a continuing spending resolution earlier this year, they extended the budget until December 8. Further extensions will require a new round of compromise, he said.

“[U.S. Senator Chuck] Schumer could potentially bring a lot of mischief, I think” said Valliere, who lamented that fiscal responsibility seems to have vacated the U.S. Capitol. Few members of Congress are willing to discuss reforms to entitlements like Social Security and Medicare, which account for a growing portion of government spending.

“No one really cares,” he said. “I’m kind of shocked by the lack of concerned about this. Many in this audience have heard Erskine Bowles and Alan Simpson talk about the debt, but nobody has heeded their warnings.”

At the same time, Congress is likely to approve “unprecedented” increases to the U.S. defense budget, which will increase the annual budget deficit.

No. 3 – Turnover At The Fed

As Janet Yellen prepares to pass her chairmanship to Jerome Powell, two other key retirements will take place as Vice Chairman Stanley Fischer and New York Fed President William Dudley will also step down. The retirements place the U.S. in “uncharted waters,” says Valliere, as the three most powerful players in the Fed are leaving at a time when monetary policy is shifting away from a period of accommodation towards an era of rising interest rates and balance sheet reduction.

No. 4 – Protectionism And Anti-Trade Policy

President Donald Trump isn’t so much anti-trade as he is against multi-lateral trade agreements, says Valliere.

“The president’s comments make it clear that he’s looking to kill NAFTA,” said Valliere. “He feels that people in places like Bethlehem, Pa. and Youngstown, Ohio have been hurt badly by these trade deals, but if he gets us out of them, there will be a lot of victims. Scuttling NAFTA will be a negative story for agriculture. Exiting the Trans-Pacific Partnership creates a vacuum in Asia that China will gladly fill.”

As U.S. policy trends towards trade protectionism, Valliere believes that other countries will begin to retaliate with barriers of their own, which could unsettle financial markets.

No. 5 – The Weakening Of Political Institutions

The election of outsider candidates like Donald Trump is a signal of the weakness of both major American political parties, said Valliere.

“Both parties have  a lot of problems,” he said. “The Republicans are close to civil war, Steve Bannon is going after legislators by trying to get his own populist nationals nominated, which will make life more difficult for Mitch McConnell.”

As the investigation into Russian interference into the 2016 presidential campaign, and potential collusion with Russian interests by White House associates, congressional Republicans may soon face the difficult choice of whether to attempt to impeach a sitting president from their own party.

Democrats, on the other hand, have failed to build a future for their party, said Valliere.

“They have no new ideas, and an elderly group of leaders in the party,” he said. So great is the leadership vacuum in the Democratic Party that Massachusetts Senator Elizabeth Warren could soon emerge as a favorite for the party’s 2020 presidential nomination. “She’s an electrifying demagogue who hates our industry and feels that we’re corrupt and greedy. She represents a real threat to our industry.”

No. 6 – As The World Turns

“You have to be concerned about two-to-three things,” said Valliere. “Most importantly, North Korea and the Middle East.”

Valliere says that there’s a one-in-five chance that war eventually breaks out between North Korea and the U.S. More concerning is the emerging bipolarity in the Middle East, where Shi’ite Muslim-led Iran and Sunni Muslim-led Saudi Arabia are competing for influence.

“Rest assured that there are millions of people in the world who would be thrilled to kill everyone in this room tonight,” he said. “We have to acknowledge that we’re a little too trusting and naïve.”