Tuesday's presidential election will produce both a winner and a loser, along with a longer-lasting political effect: A rise in populist fervor that is unlikely to abate. Donald Trump and Vermont Sen. Bernie Sanders ran on opposite sides of the populist fence, one a billionaire businessman trying to get government off people's backs and the other a renegade democratic socialist looking to rid the system of big money's corrupting influence. Sanders' quixotic run came up just short, and Trump's may as well, if current polls are accurate. But the grassroots ire that fueled them won't die out anytime soon. Vox populi, or the voice of the people, is the phrase Citigroup analysts pick to describe what they feel will be a powerful force ahead both domestically and globally, one for which many investors have not developed a sufficient appreciation.

"The important thing for investors is that political risk is not just rising, it is changing," Citi said in a report for clients. "The new style of vox populi risk emerging in advanced economies is beginning to undermine the political capital of administrations and to impact policy. This is a new political risk that potentially has a very direct and in many cases, immediate impact on the economic and market outlook." From Citi's standpoint, it means uncertainty that will stunt growth and make stocks riskier investments. The firm expects U.S. government bond yields — the benchmark 10-year note in particular — to rise, while emerging market stocks will benefit.

More clouds for the market

"There are many policy areas in which the shifting political sands could impact the global economy: world trade under rising protectionism or a shift away from monetary to fiscal policy against a backdrop of spiraling debt, are just a couple," Citi said. "Whatever the outcome of Tuesday's vote, the policy backdrop is unlikely to get much easier any time soon, and policy impasse is seldom good for confidence or growth." In a separate report, Citi's chief global political analyst Tina Fordham said a byproduct of the populism has been a general mistrust of institutions, and that will contribute to a difficult environment.

Issues such as low trust in institutions, bipartisanship, identity politics and demographic divides will continue to fuel political risk in the U.S. Tina Fordham Citigroup chief global political analyst

"The tenor of this campaign and heightened polarization does not bode well for governance, regardless of who wins the election," she said. "Issues such as low trust in institutions, bipartisanship, identity politics and demographic divides will continue to fuel political risk in the U.S." It's been a peculiar year for the market, with stocks swooning at the beginning, rallying into July and trading in a tight but volatile range since. In total, the is up more than 4 percent year to date, with a strong boost from Monday's rally, which seemed to take its inspiration from an announcement that the FBI would not be charging Hillary Clinton over her email use while secretary of state. While the news cast a balm on Wall Street, more clouds could be on the horizon. Forget the looming Fed rate hike for a moment; one imminent danger is that Trump may not go away even if Tuesday's results show him losing. "Trump may dispute a Clinton win and challenge the result, which could prolong uncertainty. Whatever the cause of uncertainty, it tends to have a detrimental impact on economic growth," Jeremy Hale, Citi's head of global macro strategy and global asset allocation, said in a note. "This would surely materially raise the risk of a global growth recession.

Wars within the parties