Why PNC’s Amanda Agati sees growth beating value

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If the record market rally continues through the end of the year, PNC Financial’s Amanda Agati predicts that value stocks will lag behind and growth stocks will play a dominant role.

Agati, the company’s chief investment officer, blames the slowdown in the economy and profits, as well as the monetary and fiscal policy backdrop.

“We are absolutely optimistic about the growth side of this equation,” she told CNBC’s “Trading Nation” Monday. “There is still a lot of track.

Agati, who has $ 183 billion in assets under management, believes investors will undoubtedly pay for growth stocks, including Big Tech. She expects the group to get a boost from a Federal Reserve that will likely keep rates stable longer than Wall Street thinks.

“We will start to see supply chain disruptions subside. We believe the focus around year-over-year inflation rates will subside,” she said. “The consensus thinks inflation is going to get so hot that it will force the Fed to cut and raise rates earlier in 2022. We just don’t see it.”

And neither do the stock and bond markets, according to Agati.

“Usually we’re in a tug-of-war between which is the right signal,” Agati said. “Both sides of the equation signal that inflation is likely to be much more transient in nature, so you see the market price.”

Overall, Agati is bullish in the broad market. However, she believes the next two months will be turbulent due to political uncertainty and an accelerated turn to growth.

“We have warned our clients and investors to buckle up before the end of the year,” she said. “Significantly, higher corporate tax rates and even very different changes on the personal side could certainly dampen this market recovery.”

But she suggests investors shouldn’t sit idly by. In growth trading, Agati likes the Invesco QQQ Trust, an ETF that tracks the Nasdaq 100 and includes Apple, Google, and Microsoft.

“On the Nasdaq 100, they continue to post very strong fundamental numbers, and we believe that will continue until 2022,” she said. “It’s not really a door-to-door business anymore. It’s just about keeping up with technology, keeping up with innovation, and keeping up with growth in a slightly slower growing world.”

Agati also sees opportunities in emerging markets.

“We’ve seen a pretty big reset from an emerging market sentiment perspective this year. But it hasn’t impacted the fundamental story,” Agati said. “We actually think on the emerging market side of commerce, the history of valuation is really generating an attractive opportunity.”

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