It's a 'messy correction' – not a bear market, Russell Investments money manager says 

Russell Investments' Doug Gordon is optimistic stocks will find a floor — just not until next year.

Gordon, a senior portfolio manager on the firm's technical asset allocation strategies team, blames uncertainty surrounding the U.S.-China trade war and Federal Reserve policy for the violent market swings.

"The first and fundamental question: Is this a correction or is this the start of the bear market? While you can certainly see a path that could get us to a bear market, I think it's more of a messy correction," he told CNBC's "Trading Nation" on Friday. "We could go a little deeper."

Gordon's comments came as the major indexes got hammered. The Dow, S&P 500 and Nasdaq saw their worst weekly performance since March. The S&P closed back in correction territory, down more than 10 percent from its Sept. 21 all-time high.

He believes the correction will span about two to four months, citing the end of the 90-day trade war cease-fire between the U.S. and China as an important marker.

"The sources of risk right now are really exogenous, meaning they're hard to forecast," Gordon said. "They're risks obviously tied to trade restrictions and the tariff escalation."

Trade has been Gordon's major risk factor for U.S. stocks for much of the year. In late June on "Trading Nation," he placed the U.S.-China tariff threat as a major economic risk in the second half of 2018. And, that issue has played a big role in the painful pullback.

"You could have full-on global growth slowing as a result of a complete breakdown in the trade and tariff negotiations," he said, even though it's not his base case.

The Fed factor

Even if the trade war gets resolved, Gordon cited the number of Fed rate hikes next year as another major uncertainty factor for investors.

According to Gordon, Wall Street is underestimating the number of hikes over the next 13 months. While it's still likely the Fed will lift rates at its next policy meeting in December, Gordon doesn't think it'll put the brakes on hikes in 2019. He warns that could further irritate the market.

Yet, Gordon makes it clear the bull market likely has at least a year left — as long as the risks are resolved, a scenario he's banking on for now.

"You want to be patient in the sense that you need to stick to what you've got which is a diversified portfolio," Gordon said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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