#621 The Macro Economy, Stocks, and Bitcoin with Amanda Agati
8/2/2021 · 54 min · transcript via mlx
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Key topics
— Amanda Agati, CIO of PNC Financial Services (fifth-largest U.S. bank with $183B AUM), discusses the COVID-19 economic recovery using high-frequency data like restaurant reservations, retail traffic, and airline volumes rather than traditional quarterly metrics.
— Inflation is viewed as transitory, driven by base effects from pandemic lows, inventory rebuilds, supply chain disruptions, and pent-up demand concentrated in older demographics with lower spending propensity.
— A high volatility regime is expected to persist through 2022 across equities and fixed income, with elevated VIX futures and MOVE index readings despite recent spot-price settlement.
— Q2 earnings growth of ~66% is largely attributable to easy year-over-year comparisons and narrow sector concentration (energy, financials) rather than broad-based fundamental acceleration.
— Interest rates have settled after initial inflation-driven moves; bond markets are pricing transitory inflation, though compressed yields remain challenging for fixed-income investors.
— Blockchain and cryptocurrency innovation represent the most exciting opportunity for investors seeking exposure to the next major technology cycle (akin to Web 2.0/4G).
Market & price signals
— Bitcoin opened the year near $30,000, roughly doubled, then drew back down to $30,000, and currently trades around $40,000. Agati notes crypto assets are among the most volatile on the planet. Q2 earnings for the S&P 500 are tracking ~66% year-over-year growth (initially expected ~60%); 2022 earnings growth expectations are around 11–12%, with key focus on whether revisions will accelerate or remain flat. The 10-year Treasury rate has rallied dramatically but has recently given back basis points; the MOVE index (bond volatility) remains at spring 2020 highs. Market valuations remain stretched relative to fundamentals; narrow earnings leadership (tech, financials, energy) contrasts with broad-based market rallies.
Actionable insights
— Market corrections are healthy: Long periods without natural 5–10% corrections suggest artificially supported valuations; expect and prepare for increased volatility in the second half of 2021 and into 2022 as policy support recedes.
— Watch 2022 earnings revisions closely: Current 11–12% growth expectations for next year are baked into valuations; if revisions decline or remain flat (rather than accelerate), equities—especially small-cap and value names—face downside risk.
— Crypto and blockchain are infrastructure plays: Rather than treating Bitcoin or altcoins as tactical bets, view participation in custody, trading, and tokenization as long-term portfolio positioning aligned with genuine innovation cycles (Web 3.0, IoT, AI), similar to the gains from early Web 2.0 adoption.
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