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April 16, 2015

KKR Releases Report on Europe by Henry H. McVey and Aidan T. Corcoran

Says Europe is "Returning to Normality"

NEW YORK--(BUSINESS WIRE)-- KKR, a leading global investment firm, today released a new outlook piece on the European economy by Henry McVey, Member & Head of Global Macro and Asset Allocation, and Aidan T. Corcoran, who focuses on - European macroeconomics. In the report, Thoughts from the Road: Europe - Returning to Normality, McVey and Corcoran discuss how lower oil prices, lower interest rates, and less fiscal austerity amid a weaker currency are helping improve the global macroeconomic backdrop in Europe.

"Overall, we continue to advocate our thesis of focusing on sectors and countries where the macro momentum has turned positive. However, the bigger picture conclusion we left with is that we believe European GDP is ‘Returning to Normality' after several years of austerity, bank deleveraging, and current account narrowing," Henry McVey, Member of KKR & Head of Global Macro and Asset Allocation, said.

Some high-level insights from the report include:

  • Europe remains on an economic upswingand as such, we are now revising our 2015 European GDP forecast to 1.7% from 1.3%, against current consensus of 1.3%. We see multiple ways for growth to "win" in Europe in 2015, including low rates, cheaper oil, less fiscal drag, and a weaker euro. Our quantitative GDP model is even more bullish, suggesting 2.4% growth over the next 12 months.
  • Mario Draghi has orchestrated a perfect time to launch Quantitative Easing (QE), in our view.
  • In terms of credit conditions, the gap between some of the Haves and the Have-Nots has narrowed.
  • We spent some time listening to a few experts talk about European capital market structure. We left unimpressed. While banking union has become a reality, capital markets union remains so far an aspiration, ongoing opaqueness favors patient capital that can take advantage of arbitrary pricing and/or harness volatility.
  • Some of the well-informed macro and economic folks with whom we spoke view China's slowing as more of a global risk than GreeceWe tend to agree.
  • Social unrest and political tension remain risks to the story. Across Europe, we think that wage growth is likely to remain sluggish, while liberal benefit packages, including pensions, may continue to be slimmed down.

Links to access this note as well as an archive of previous publications:

About KKR

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

The views expressed herein are the personal views of Henry McVey and Aidan T. Corcoran 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. None of Mr. McVey, Mr. Corcoran nor KKR assumes any duty to update such statements.

Kristi Huller, +1 212-230-9722
Nina Suter

Source: KKR

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