Charles Schwab Sees CCC Liquidity ‘Slam’

The video discusses the current state of the market, highlighting record highs in the US total return index. However, Schwab's chief fixed income strategist warns that these gains may not last, predicting a potential liquidity crunch. This could lead to a rush for exits, impacting investors regardless of their holdings. Managers claim to select the safest companies, but in a fire sale, this may not matter. The market's increasing duration and high valuations are concerning, making it appear frothy. Schwab advises against buying triple C-rated investments at this time.

What is the current state of the total return index in the US?

• It is at a record low.

• It is at a record high.

• It is stable.

• It is declining.

What might happen when market gains turn?

• Investors will easily exit their positions.

• A liquidity crunch may occur.

• The total return index will stabilize.

• Market spreads will widen significantly.

What is a potential risk if a fire sale occurs in the market?

• Investors will profit significantly.

• The type of holdings will not matter.

• It will be easy to sell any holdings.

• Market valuations will decrease.

What is a characteristic of the current market that makes it look frothy?

• Lower valuations

• Stable valuations

• Shorter durations

• Longer durations

According to Schwab, what is not advisable to buy in the current market?

• Double A bonds

• Triple C bonds

• Triple B bonds

• Triple A bonds