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Credit and Debt Monitor – 1.31.2020

Summary:
The decline in the strength of the Q4 narrative of a risk of “collapse” in credit markets continued in January.Uniquely among our macronarratives, cohesion actually dropped for debt and credit market narratives.We think that the heightened attention on the coronavirus outbreak and generally positive news about the China Trade War were largely absent from the leveraged loan and private credit-focused discussions that dominated in late Q3 and early Q4.We don’t think that these markets are as mass media-driven as equity markets and asset allocation / macro – so while we would generally argue that this has created a complacent narrative, we don’t counsel establishing any active positions on that basis. Narrative Map Source: Quid, Epsilon TheoryNarrative Sentiment Map Source:

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  • The decline in the strength of the Q4 narrative of a risk of “collapse” in credit markets continued in January.
  • Uniquely among our macronarratives, cohesion actually dropped for debt and credit market narratives.
  • We think that the heightened attention on the coronavirus outbreak and generally positive news about the China Trade War were largely absent from the leveraged loan and private credit-focused discussions that dominated in late Q3 and early Q4.
  • We don’t think that these markets are as mass media-driven as equity markets and asset allocation / macro – so while we would generally argue that this has created a complacent narrative, we don’t counsel establishing any active positions on that basis.

Narrative Map

Credit and Debt Monitor – 1.31.2020
Source: Quid, Epsilon Theory

Narrative Sentiment Map

Credit and Debt Monitor – 1.31.2020
Source: Quid, Epsilon Theory

Narrative Attention

Credit and Debt Monitor – 1.31.2020
Source: Quid, Epsilon Theory

Narrative Cohesion

Credit and Debt Monitor – 1.31.2020

Fiat News Index

Credit and Debt Monitor – 1.31.2020

Narrative Sentiment

Credit and Debt Monitor – 1.31.2020
Rusty Guinn
Executive Vice President of Asset Management, Salient. Rusty Guinn is the executive vice president of asset management at Salient. He oversees Salient’s retail and institutional asset management business, including investment teams, products, and strategy. Rusty shares his perspective and experience as an investor on the Epsilon Theory website.

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