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Cracks Emerge In Junk As Stock Slump Spills Over
There's consternation in high yield bonds. Or at least that's the impression one gets from a quick g
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I believe a good trade into next year might be to be long junk (on bonds) and long crap (on stocks), because of the Fed back stop on credit I feel more comfortable owning high yield outright, this week’s spread change notwithstanding. On equities I rather get my exposure to crap via calls and option spreads, all the cyclical stuff I dislike and that has fallen victim to Covid and poor management, in sum, the crap: banks, casinos, airlines, restaurants and malls. I’m not rotating out of my juicy and over inflated tech to buy these stocks, If we do get some inflation the crap will shine while junk will still deliver some yield, so that’s my thesis, in 2021 trade junk and crap.