Amanda Agati, PNC Chief Investment Strategist, joins Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Heidi Chung to discuss the ongoing market uncertainty amid the coronavirus outbreak.

Video Transcript

- Let's check in now with Amanda Agati. She's a familiar face on this network. PNC chief investment strategist. Amanda, thanks for being with us. I just want your take on what you saw the Federal Reserve do today to help calm the markets, especially the credit markets.

AMANDA AGATI: Well, thank you so much for having me back again. It's great to see everybody, even under these circumstances. You know, it's been a really interesting few weeks. The Fed, and the Powell Fed in particular, clearly is willing to do whatever it takes to try to stabilize and fix the plumbing in much of the fixed income markets. They are excellent at providing liquidity to the system.

And I think with the announcements this morning, that just furthers the point that they are willing to do kind of whatever it takes. The challenge is really that we haven't solved the solvency issue. And that's where fiscal stimulus really needs to come into play, and fast. And so I think that's really why you saw futures start to rally into the open because the Fed, you know, again, is pulling out all the stops, throwing the kitchen sink at it. But without a true fiscal stimulus package being passed-- and that was a real disappointment last night. You know, the challenge is still, where do we go from here? So we really do need fiscal stimulus to step in and solve the solvency issue right now.

BRIAN SOZZI: Hey, Amanda, Brian here. Always good to speak with you. What's your first thought when you see a market after the Fed comes out, rips out its bazooka-- its majorly big bazooka-- and then the market goes up, and then it reverses now when it's under pressure. What are some of those thoughts in your mind?

AMANDA AGATI: Well, you know, I have given the Fed a really hard time over the last 18 plus months or so, despite, you know, not trying to fight the Fed necessarily. I've given them an awfully hard time about you wasting precious ammo and doing rate cuts when we may not have necessarily needed them. But thank goodness for the Fed taking swift action here in these last few weeks. Without that, I think we'd be in much more difficult shape, particularly as it relates to the plumbing in the fixed income markets.

The challenge is they don't have enough tools. And so where do we go from here? It really is critical that we get this fiscal stimulus package done to help bridge the gap. Even if we got a vote today, it still isn't going to be immediately implementable. And so we really need fiscal stimulus to step in here for the Fed to hand off the baton to fiscal stimulus.

But then the other thing-- and no policy can really cure this-- is where do virus ultimately crest? We're nowhere near that. Or at least it doesn't feel like we're anywhere near that. And so until the market can perceive us getting close to the peak or the cresting, I think the markets are just going to continue to chop around and be disappointed.

HEIDI CHUNG: Hey, Amanda, it's Heidi here. So, yeah, we're waiting on the fiscal stimulus bill at this point. But in this environment that we're in with all of this uncertainty, no one has any idea when we're really going to be able to emerge from this. How should investors be positioning themselves in this kind of situation, specifically when we're talking about portfolio allocation?

AMANDA AGATI: Well, there's a-- believe it or not, there are a number of actions that investors should be considering in this environment. This is not a do nothing environment. But we would caution to not make grand and sweeping portfolio changes, particularly given the number of dislocations that we're seeing. This has not really been a very orderly market correction. That's probably an understatement. And so we're very much guiding investors to walk, not run as it relates to portfolio rebalancing. There

Are other things that actually look pretty interesting in this environment. We actually think, believe it or not, emerging market equities are at a very interesting position here. And so we are encouraging investors to get close to their strategic targets, both on emerging market equity side of the equation, but also for emerging market debt. We think those two areas-- those two asset classes look particularly attractive here.

Another one is global infrastructure. It really is a nice way to stay invested in equities, but provide some ballast into portfolios. Dampen that volatility exposure given the less cyclical nature of the infrastructure businesses in that particular asset class. The flip side, though, is something that I don't think is getting enough attention, really, in the midst of the crisis as it relates to the virus. And that's really understanding energy exposure and portfolios both on the equity side and fixed income side. You know, we've had this double whammy effect where the virus and the shutdowns related to that almost happen simultaneously with the OPEC price war.

And so what is transpiring here is this double whammy effect on portfolios, and frankly the markets. And so we're cautioning investors to make sure they're very clear on what types of energy exposure may be sitting in their portfolios, both on the equity and fixed income side because that really is kind of the nail in the coffin for potential earnings growth and the trajectory of kind of where we go from here in terms of the market. So a couple of positives there. But also the one that we think deserves a lot of attention as well.