JPM's Kolanovic strikes again;

1, low rates leads to institutions rotating out of bonds into equities

2, creates downward pressure on volatility

3, which in turn creates a positive feedback loop where systematic and disc hedge fund strategies increase allocations to equities (this could play put for most of 2021)

4, if current below average exposure goes to historic percentile would result in $550 bn inflow from systemic and hedge fund strategies

5, add forgotten buybacks to the mix and Kolanovic argues for their 4400 SPX px target.

Below chart shows that average VIX levels closely follow levels of interest rates with a ~18-month lag. Conclusion is basically;

"Given the significant increase of monetary accommodation 9 months ago, we expect it to pressure volatility for most of 2021"