Whatever you do, don’t you try and say we didn’t warn you.

Time after time, post after post, we’ve said the same thing: high yield is a bubble.

The fundamentals are bad, the rally is overdone, and the spread compression off last year’s wides is nothing short of spectacular. Now, we’re seeing that bubble burst. If you missed this week’s posts on this very subject, see here:

But as compelling as all of the evidence presenting in those posts (and others) is, there is perhaps no better warning sign that trouble may lie ahead than the following from BofAML who notes that the percentage of HY investors reporting above normal cash levels exploded to 45% in March versus just 24% the previous month while the number reporting below normal cash levels was chopped in half over the same period.

Via BofAML

Both high grade and especially high yield investors reported higher cash balances. Among high grade investors the share reporting above normal cash levels increased to 19% in March from 14% in January, while the share reporting below normal levels declined a bit to 11% from 12% (Figure 16). For high yield investors the share reporting above normal cash levels increased to 45% from 24% in January, and the share below normal declined to 9% from 18% (Figure 17).