Wall Street's Ticking Time Bomb in 2026 Isn't Tariffs -- It's the Fed

Core Viewpoint - The article discusses the potential risks facing the U.S. stock market in 2026, primarily focusing on the Federal Reserve's divided stance and the impact of President Trump's tariffs on the economy and stock valuations [4][10][16]. Group 1: Stock Market Performance - The S&P 500's Shiller P/E Ratio, which averaged 17.3 over the last 155 years, closed out 2025 at over 40, indicating a high valuation during a prolonged bull market [2]. - The third year of the bull market saw significant gains, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite increasing by 13%, 16%, and 20% respectively [6][7]. Group 2: Economic and Policy Concerns - Headwinds for the stock market include high valuations and the potential negative effects of tariffs on the U.S. economy, particularly concerning domestic manufacturers [9][10]. - The Federal Reserve's recent history of dissenting opinions during policy meetings raises concerns about its ability to provide a cohesive monetary policy direction, which is critical given the high market valuations and tariff uncertainties [14][16]. Group 3: Federal Reserve Dynamics - The Federal Reserve has experienced unprecedented dissent in its policy decisions, with recent meetings showing conflicting opinions on interest rate adjustments [15]. - Jerome Powell's term as Fed Chair is set to end in May 2026, and the appointment of a new chair without Wall Street's support could lead to a crisis of confidence in the Federal Reserve [17][18].