If we can make it through the US election without “incident” — and I’ll let readers define “incident” however they see fit — US equities could benefit from a “fierce” mechanical bid.

That’s according to Nomura’s Charlie McElligott, who on Wednesday made the case for a potentially outsized reallocation from the vol-control universe contingent on rVol migrating lower, which it will as long as no fresh downside shocks “spoil” the math as August’s “growth scare” days drop out of the three-month lookback.

The figure below shows you one- and three-month realized. The latter has some catching down to do as those early-August sessions roll out of the window.

“Drop” days for August 2 and August 5 are imminent. Recall that those were harrowing sessions, defined by an escalatory rates rally, a stock pullback and one of the most dramatic vol shocks on record. And, again, they’re about to fall out of the three-month calculation.

That matters, assuming the three-month horizon is an input in your vol-control model, which it will be. “[A]s the rVol input goes mathematically lower because those outlier change days are no longer ‘in-sample,’ equities exposure needs be mechanically taken higher,” McElligott wrote.

How much higher? (“WEN LAMBO?”) How much buying could there be assuming the remainder of mega-cap earnings, NFP and the election don’t introduce any new “shock” sessions?

Well, hypothetically “we are talking something fierce,” Charlie remarked, pointing to the model estimates shown in the table below (you’re looking at the green-shaded boxes, obviously).

Even if the S&P averages a 1% daily change (not exactly “calm”), vol control would be in for nearly $31 billion of futures-buying over the next week. If spot manages to stay well-behaved such that daily changes are a more subdued 0.5%, the flow from vol control is meaningfully larger at more than $41 billion over one week and $57 billion looking out past the election.

Of course — and to reiterate — that’s contingent on the absence of new shocks or, as McElligott put it, on a “hypothetical election event-risk clearing.”

Here’s hoping. And do note that any such mechanical bid from vol control would come atop the bullish flows from unwound hedges (i.e., the en masse jettisoning of downside rendered superfluous) in a prospective post-election vol crush / risk melt-up scenario.