Enrage fail Street’s worst week in two years is creating anxiety that diverse losses are ahead for investors.
Russell Investments’ Douglas Gordon insinuated recently that feeling may be justified. He contended an unusual phenomenon is creating near-term questions for the stock market.
“You’ve got late stage in the expansion where you’ve got tightening capital policy. But you’ve got stimulative fiscal policy concurrent with that. That’s not at best rare, that’s almost unheard of,” the firm’s senior portfolio administrator told CNBC’s “Trading Nation” this week.
“That affable of one foot on the gas [and] one foot on the brake concurrently is going to make for a unique vend,” he added.
Gordon attributes rising 10-Year Treasury Note takings, and the potential for a Federal Reserve policy error, as the main catalysts behind what could at bottom put the markets in textbook correction territory — which is defined as a 10 percent discard or more.
The threat of rising borrowing costs, and the potential for an overreaction by a Fed that may promptly hike interest rates, is stirring widespread angst among investors.
“It’s [turbulent yields] going to put some pressure on the forward expectation around performers’ earnings,” he noted.
His comments came as stocks were tanking, and volatility was kicking its highest level since the 2016 presidential election.
Gordon, whose fast has $296 billion in assets under management, is urging investors to visit well-diversified and nimble.
“There is going to be an opportunity to buy the dip,” Gordon said.