Most market participants have accepted that 2018 is unlikely to be another low-volatility year like 2017, but how do we translate the rising volatility into our market forecast? Some Wall Street bulls such as RBC's Lori Calvasina have revised their year-end forecasts down recently.* Are those revisions because of the higher VIX?

Does a rising VIX signal lower equity returns? This may be a misconception among many investors. A rising VIX is usually accompanied by sequential negative market returns, the magnitude of which can be substantial, particularly during a rapidly increasing VIX environment. Therefore, we tend to associate lower returns with higher VIX. However, by definition, higher VIX is only a reflection of volatile movements in the market – it is not a predictor of future returns.

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