Market indices have begun to pull back this week ahead of Thursday's Personal Consumption Expenditures (PCE) print. Despite this, BMO Wealth Management US Chief Investment Officer Yung-Yu Ma characterizes market conditions as being a "Teflon market," where bad news cannot dampen recent stock gains.

Ma sits down with Yahoo Finance's Akiko Fujita to talk about how anxious equities truly are about the upcoming inflation gauge, also touching on core market themes amid interest rate predictions and recession forecasts.

"A lot of people are thinking there could be a replay of the mid-1990s, where we had strong productive growth, we had relatively low inflation, and we had market gains for several years in a row," Ma explains. "I think that's right now, the combination of that is allowing the market to shake off some of these near-term challenges that have risen, both inflation challenges, the Fed [Federal Reserve] pushing out rate cuts, geopolitical concerns."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

AKIKO FUJITA: Well, stocks edging lower today as investors await the Fed's preferred inflation gauge out tomorrow. Any sign of prices re-accelerating sure to push back expectations for an interest rate cut from the Fed. But our next guest says, that may not be enough to pull back stocks. He says we are in a Teflon market where bad news just doesn't stick. To break it down for us we've got Yung-Yu Ma BMO Wealth Management US Chief Investment Officer. It's good to talk to you.

A Teflon market, but I have a hard time thinking that if that inflation print comes in much hotter than expected, we're not going to see a big reaction from the markets.

YUNG-YU MA: Akiko, it's great to be here. We actually did see two already somewhat difficult inflation prints with CPI and PPI already this month. The PCE inflation of course that is the Fed's preferred measure. It's true if it comes in much hotter, I think that would give the market's pause. But so far the market's been able to shake off a lot of these-- inflation prints have come up so far because some of the forward looking measures of inflation still look pretty good in terms of inflation moderating going forward.

So it's still a backward looking measure. That's important to keep in mind in some of the forward looking measures still look favorable.

AKIKO FUJITA: And when you talk about the market really being able to shake off some of these disappointing or hotter than expected inflation print other disappointing data. Is it more about the tech trade, this huge enthusiasm around AI overshadowing that or I mean, how do you-- how do you make sense of the reaction that we've been seeing in the market or is it about just this bumpy road on the rate to a rate-- on the road to a rate cut largely being baked in already?