The stock market just turned in its worst one-day performance of the year, worries are escalating in Washington and on Wall Street that President Donald Trump's agenda has hit stall speed, and the notion that the Fed will have a free ride seems considerably less certain.
Should this keep up — and there's a growing drumbeat on the Street that it will, at least in the near term — it could set up Trump and Yellen on a collision course.
"The different perspectives of Chairwoman Yellen and President Trump further underscore the potential for a future collision, rather than productive collaboration," Michael Arone, chief investment strategist at State Street Global Advisors, said in a note.
The markets had been looking for real progress from Trump's promises on tax reform and regulatory rollbacks. The uncertain fate of this week's health-care vote has thrown into question the administration's ability to get the rest of its agenda implemented in a timely fashion.
While the market shrugged off the March 15 Fed interest rate increase — in anticipation of Trump-spurred economic growth — it might not have quite as strong an appetite for the two more hikes central bank officials have indicated they will approve this year.
"There's a real policy timing mismatch here," Arone said. "Yellen is moving the ball down the court, while Trump still has failed to put the ball in play."
Reference: CNBC