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Uncertainty is the biggest headwind facing the market, money manager Douglas Gordon says

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Markets are 'craving certainty,' money manager sees a sideways market prevailing

With the Dow sitting near where it began the month, one money manager doesn't see much changing — at least not until Wall Street gets more guidance from the Federal Reserve and the White House.

For that reason, Russell Investments Senior Portfolio Manager Douglas Gordon believes uncertainty is the biggest headwind affecting investors right now.

"We've kind of seen the markets go sideways a little bit. I think it's a case where the markets are craving certainty, and we don't have that. We don't have that with respect to monetary policy," he told CNBC's "Trading Nation" this week.

"And, we have a little bit of uncertainty obviously on the fiscal policy side or at least on the [Trump] administration side," he added.

Gordon, who appeared on the program on February 2 just as the correction began, had warned investors near-term challenges were ahead. He believed inflation fears and the 10-Year Treasury Note yield jump could soon push the markets in textbook correction territory, and he planned to buy on the pullback.

Six days later, he was proven right. On February 8, the Dow closed down more than 10 percent from its all-time high. By the next day, the index closed out of correction.

"We incrementally bought into that dip," Gordon said.

Now, it appears the markets are in wait and see mode. Gordon said a trade war is his biggest risk because it could push the world into a recession. But, he believes it has a "relatively low probability."

The second factor is uncertainty surrounding next week's Fed decision on interest rates, and the potential of a policy error.

Next Wednesday, Jerome Powell will deliver his thoughts on the economy during his first news conference as new Fed chair, and is expected to give guidance on the number of expected interest rate hikes this year.

"We're later in the cycle, so at some level it makes sense what they're doing. But I think the market is still kind of re-pricing and re-digesting what their expectations are around the Fed's rate path going forward," Gordon said.

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Russell Investment’s Doug Gordon on the market’s biggest risk now