NEW YORK--(BUSINESS WIRE)--KKR today released “Midyear Outlook: Five Distinct Macro Disconnects,” the latest report by Henry McVey, Head of Global Macro & Asset Allocation. In the report and also in a new video on KKR.com, McVey details five distinct macro “disconnects,” or arbitrages attractive for long-term patient capital.
They are as follows:
|1.||Given ongoing financial services deleveraging, the current illiquidity premium that has emerged in many lending arenas is quite compelling.|
|2.||In an environment where central banks are holding nominal interest rates below nominal GDP, McVey favors real assets with yield, growth, and inflation hedging.|
|3.||In pursuing rising GDP-per-capita stories in the emerging markets, McVey encourages folks to look beyond traditional public equities.|
|4.||With China’s structural slowing now upon us, there is an increasing number of restructuring opportunities emerging across Asia, Europe, and Latin America.|
|5.||In the developed markets there are still some opportunities in the corporate sector as many balance sheets remain under-levered and inefficient.|
To fund these five distinct macro disconnects, McVey continues to recommend a massive underweight to traditional government bonds.
While there currently is a premium placed on nimble asset managers, McVey cautions investors to remember that sometimes the best strategy is to do nothing, letting existing investments play out.
“So the bottom line on our current asset allocation framework is that things just don’t seem to be too “broke,” so we are inclined not to try to “fix” them,” McVey writes. “That said, there is still a lot going on in the global markets these days, and as such, we wanted to use this mid-year update to reinforce some of our most important takeaways, as well as discuss some tweaks we are making on the margin.”
Access the full report as well as an archive of his previous publications below:
- Read the latest Insights on KKR’s web site
- Download a PDF of Midyear Outlook: Five Distinct Macro Disconnects
- Download the KKR Insights app on iTunes
- Archive of previous publications
KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world‐class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners' capital and brings opportunities to others through its capital markets business. References to KKR's investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (NYSE:KKR), please visit KKR's website at www.kkr.com.
The views expressed herein are the personal views of Henry McVey of KKR and do not necessarily reflect the views of KKR. This information is not research and should not be treated as research. It does not represent valuation judgments with respect to any financial instrument, issuer, security or sector that may be described or referenced herein and does not represent a formal or official view of KKR. It is being provided merely to provide a framework to assist in the implementation of an investor's own analysis and an investor's own views on the topic discussed herein. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially, and should not be relied upon as such. This information should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy. This release may contain projections or other forward‐looking statements. Neither Mr. McVey nor KKR assumes any duty to update such statements.