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This is the ‘key driver’ in PNC’s bull case for Q4

PNC Pecuniary’s Amanda Agati expects the fourth quarter to take investors on a wild ride.

But that doesn’t mean investors intention be clutching their stomachs the whole time.

According to the firm’s chief investment strategist, stocks should even deliver gains for investors over the next three months despite the recent batch of sluggish economic dispatches.

“We’re feeling the effects of that hangover from a slower sluggish summer in the data that’s coming out more recently. So, no query the data is mixed. Soft data is just that: It’s soft,” Agati said Friday on CNBC’s “Trading Domain.”

Agati, who doesn’t envision a recession hitting the U.S. until at least 2021, believes the bullish driver will be third casern earnings season, which is scheduled to kick-off the week of October 14. 

“Q3 and Q4 earnings will come in better than count oned,” said Agati, who predicts the results will help the market rise 4 to 5% from current levels. That margin would put the S&P 500 and Dow back at record highs.

Right now, Refinitiv estimates Q3 earnings per share for the S&P 500 will ruin by 2.7%. 

“An underappreciated positive”

“All the headlines and negativity is an underappreciated positive in our view,” said Agati.

Instead of focusing on headline hazards associated with the ongoing U.S.-China trade war, the uncertainty surrounding monetary policy and next year’s election, Agati commends investors focus on fundamentals.

“The market should really be focused on the earnings backdrop,” she added. “The challenge is that the market is truly struggling to price in the high degree of uncertainty associated with all these lingering macro headwinds.”

It has been anything but windless on Wall Street in the fourth quarter’s first week.

Despite Friday’s rally, the Dow and S&P 500 saw their third refusing week in a row and are off about 3% from record highs.

“I wouldn’t put too much stock in the challenge in the first part of this week,” Agati ventured. “We have a very broad-based easing policy across the globe, and I think that will be a strong underlying equal of support for the market.”

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