The midterm elections have come to a close and top JPMorgan Chase & Co. strategist Marko Kolanovic says equities will rally into the new year and investors will pocket the most profits off riskier bets like small cap stocks.

Per a recent note:

“We still think that the market will move higher into the year-end, and investors may have to participate on the upside (appropriate exposures may be high-beta indices such as Russell 2000 and MSCI Emerging Markets),” Kolanovic wrote in the note.

“We believe (out of consensus) that a split Congress is the best outcome for US and global equity markets. As the President cannot count on Congress or the Fed for more easing, he will need to do what is in his power to keep the economy rolling — drop the damaging trade war and turn it into a winning deal.”

Kolanovic is known for his market-moving calls, and he also said a decline in volatility easing systematic selling, increased buyback activity and strong earnings also will help push stocks up.

The Russell 2000 sank 10.9 percent during the volatile month of October, but is up 2.3 percent on the year. The MSCI Emerging Markets have had a terrible year, falling 14.4 percent overall.

Kolanovic noted “that many investors are positioned for a rolling bear market and are exposded to the risk of a rolling short squeeze into year-end.” He also said that after October’s massive sell-off and continuing troubles for China’s economy, he expects progress on a new deal with China to end the tit-for-tat tariffs with the Trump administration.

“While the fuel for the sell-off was systematic flows, low liquidity and HF deleveraging, the catalyst was politics. It was essentially a miscalculation and a conflict between the US Administration and Fed going into important midterm elections,” Kolanovic said.

Marko Kolanovic, Ph.D., is is the Global Head of Macro Quantitative and Derivatives Strategy and Senior Analyst at JPMorgan Chase. He is responsible for equity derivatives and delta one strategy for the largest bank in the U.S.

Per his bio on Bloomberg:

His trading methods have been implemented by major hedge funds and his expertise has been used by major investment offices around the world. His work is frequently quoted in publications such as the Wall Street Journal, Financial Times, Barron’s, and others. His work is frequently quoted in financial press, and for his timely and accurate short term forecasts of stock market returns, the media dubbed him The Man who moves Markets (CNBC) and Gandalf (Bloomberg). He has developed a number of scientific theories and models, has authored top-cited research publications, and is the winner of numerous excellence awards.