Cognitive dissonance is holding opposing views in your head and trying to make sense of it while maintaining your sanity. The equity market appears to be having its moment of cognitive dissonance. The market seems to be rallying because, after Yellen’s lunchtime speech, most seem convinced the Fed keeps pumping. Yet the market is not going to get the more rapidly growing economy that can fulfill its earnings expectations and get sustained central bank largesse. Pay your money and take your chances, as the expression goes, but be forewarned: value stocks against future earnings or for inflows of central bank capital -- Yellen is telling it no longer can be for both. Whether the economy achieves accelerating growth with higher rates is a tale for another day, but it suffices to say we have our doubts.
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