By Steve Blumenthal, CIO
CMG Capital Management Group
Volatility is picking up in high yield. The decline in the price of oil has heightened concern for the survivability of energy related high yield bonds. Our high yield bond strategy hit its stop-loss level and we moved to short-term treasury and money market exposure. In my 20-plus years of trading the trends in the high yield market, I have never traded this much in such a short period of time.
Ahead, I believe, is a major high yield bond and sovereign debt default cycle (2015-2016). The high yield market is a pretty good forecaster of economic and market cyclical trends. Stay defensive and risk focused with high yield. I believe it will enable a 2009-like trading opportunity at some point within the next several years.