Halister News

(Bloomberg) -- BofAML January Credit Investor Survey showed high-yield investors increased overweight positioning and reduced their cash levels to the lowest reading since at least 2011, high yield strategists led by Michael Contopoulos write in note.

• BofAML cautions against this over-stretching and recommends that investors pare their risk exposure; reiterates its earlier recommendation of tactically short position
• The combination of “significant deviation from fundamentals and low cash levels is a recipe for trouble in the near- term”
• Survey showed significant overweight positioning in Energy for the first time since September 2014; BofAML suggests investors move to market-weight stance on the sector as spreads are now in line with the overall index
• While there is optimism about the possibility for reduced regulation, lower taxes, and higher infrastructure spending in 2H17 and early 2018, a lack of a clear plan of execution undermines optimism