'Short-term volatility' ahead of election season: Nuveen CIO

With new inflation data and the April Jobs report falling short of expectations, the Federal Reserve is in a tough spot, potentially putting investors in a tougher spot due to uncertainty. With the election season heating up, there is mounting challenges for the market.

Yahoo Finance Anchors Brian Sozzi and Akiko Fujita are joined by Nuveen Investments CIO Saira Malik at the Annual Milken Global Institute Conference to discuss what investors need to keep in mind as the election approaches during this current economic environment.

Malik reminds investors what they need to pay attention to: "We do have new things to consider this year even though the candidates are known, which would be sort of a positive for the markets because they like transparency and clarity. Think about artificial intelligence, potential misinformation, international issue issues, how we're dealing with all of these geopolitical issues. Those are going to be important to the voters. And that could also impact market movements and election volatility."

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This post was written by Nicholas Jacobino

Video Transcript

Let me just check some of these off job market slowed down a little bit.Economic slowdown is happening based on GDP.Election season, inflation is still high.Are investors still being very complacent?Economy is slowing moderately.So not in a recession, election years do tend to bring higher volatility but markets tend to go up in election year.So that's kind of a neutral even somewhat on our side.Those are important and let's go back to earnings which are the real key driver of markets have been strong.80% of companies in the first quarter of this year have beaten earning consensus.That's a positive for the market.It's led by technology.So I agree, we need to be a little more selective but that earnings as long as they continue, I think markets can stay resilient even though they are a little bit expensive.As you look ahead to the second half of the year.The election on the calendar obviously, where is political risk factor into your overall system?I say short term volatility, long term less volatility because we'll go back to the economy and earnings once the election happens.But leading up to it more volatility in the markets.And we do have new things to consider this year.The candidates are known, which would be sort of a positive for the markets because they like transparency and clarity.Think about artificial intelligence, potential misinformation, international issue issues, how we're dealing with all of these geopolitical issues, those are going to be important to the voters.And that could also impact market movements and election volatility.