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JPMorgan's top quant says tax reform will boost the stock market

JPMorgan's top quant said the tax plan released by President Trump and the GOP last week could further boost the stock market if it becomes law.

"If we can have tax reform, [the] market's going to look a little bit cheaper and people will probably go and pick up some value-type stocks," said Marko Kolanovic, global head of macro quantitative and derivatives research, on CNBC's "Fast Money" on Tuesday. "I think market valuations are high, [but] in the context of low yields they're OK."

Kolanovic was credited by traders for causing the whole stock market to drop one day in July after he put a report out to clients telling them to hedge against a market drop and pop in volatility. In early August, volatility spiked and the market pulled back, proving the strategist's call correct. However, the S&P 500 would soon resume its smooth march to new highs, posting a new record on Tuesday.

The strategist said there could be trouble brewing over the long term for equities as the Federal Reserve unwinds its extraordinary stimulus measure, put in place during the financial crisis. The central bank said it will begin to do that this month.

"Rates don't even have to go higher, because the impact of the outflows or reduced inflows into the [Fed's] balance sheet may hit the equity multiple," he said.

WATCH: What Kolanovic said about the markets in August