Rosenberg Daily - Investing

In my view. bond yields have further potential to drop under the assumption that the US (indeed. global) economy continues to expand below its potentiai You don't need a recession call to have deflation, and Japan is evidence of that, though a recession cannot be ruled out given how little a cushion the US. economy has with a sub-2% growth trend and fiscal retrenchment around the oorner combined with lagged effects of the European recession on exports and industrial activity,

The VIX index at 18x, the Investor Intelligence bear camp shrinking to less than 24.5% (42.5% for the bulls) and Market Vane sentiment at 59% (which is still constructwe for the S&P 500) do not tell me we are anywhere near a cathartic selling climax in equities just yet. But when the market shifts to an oversold extreme, only then will it be appropriate to shift asset allocation away from a defensive posture and more towards the opportunities that cyclical and growth stocks will inevitably offer once they price in the outlook currently being discounted by the Treasury market...