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June 30, 2016

KKR's Henry McVey: "We Remain in an ‘Adult Swim Only' Investment Environment"

New Mid-Year Report Discusses Global Macro Trends

NEW YORK--(BUSINESS WIRE)-- KKR, a leading global investment firm, today released Adult Swim Only: Mid-Year Update, a new mid-year global macro trends report by Henry H. McVey, KKR's Head of Global Macro and Asset Allocation ("GMAA").

"It definitely feels like 2016 has emerged as a year of ‘Adult Swim Only,'" Henry McVey said. "Markets have cut a wide swath so far this year, enticing investors to buy and/or sell often at what was - in hindsight - likely the time to do the exact opposite of what one's emotional core was suggesting. We stick to our base case that we remain in an ‘Adult Swim Only' investment environment, as we see more asynchronous growth ahead. Against this backdrop, however, we still see significant opportunity."

Highlights from the report include:

      1.   Despite the negative overhang of Brexit, we are not yet calling for a recession and/or bear market. However, we still see more limited upside to financial asset appreciation than in prior years - and with higher volatility.
 
2. Given the shift towards negative interest rates and ongoing and intensifying regulation of the banks, we are seeing a major spike in opportunities in the mezzanine and asset-based lending areas of the global economy, Europe in particular.
 
3. More than ever, we feel confident about our outsized bet across Private Credit.
 
4. We continue to favor Real Assets with yield and growth, but we also think that certain commodities are bottoming.
 
5. We no longer see any rate increases in 2016, which also has implications for the U.S. dollar.
 
6. The investment community now better appreciates that there are limits to central bank intervention, negative rates in particular.

Links to access this note as well as an archive of Henry McVey's previous publications follow:

  • To read the latest Insights: click here.
  • To download a PDF version: click here.
  • To download the KKR Insights app on iTunes: click here.
  • For an archive of previous publications of Insights and Thoughts From the Road: click here.

About Henry McVey

Henry H. McVey (New York) joined KKR in 2011 and is Head of the Global Macro and Asset Allocation team. Mr. McVey also serves as Chief Investment Officer for the Firm's Balance Sheet. Prior to joining KKR, Mr. McVey was a managing director, lead portfolio manager and head of global macro and asset allocation at Morgan Stanley Investment Management (MSIM). Prior to that, he was a portfolio manager at Fortress Investment Group and chief U.S. investment strategist for Morgan Stanley. While at Morgan Stanley, Mr. McVey was also a member of the asset allocation committee, and the top ranked asset management and brokerage analyst by Institutional Investor for four consecutive years before becoming the firm's strategist. He earned his B.A. from the University of Virginia and an M.B.A. from the Wharton School of the University of Pennsylvania. Mr. McVey serves as co-chair of the TEAK Fellowship board of trustees and is a member of the Pritzker Foundation and Lincoln Center Investment Committees.

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 www.kkr.com and on Twitter @KKR_Co.

The views expressed herein are the personal views of Henry McVey of KKR, as Head of the Global Macro and Asset Allocation, and do not necessarily reflect the views of KKR. References to "we", "us," and "our" refer to Mr. McVey and/or KKR's Global Macro and Asset Allocation team, as context requires, and not to 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. References to a target portfolio and allocations are hypothetical allocation of assets and not reflect an actual portfolio. The views expressed herein and discussion of any target portfolio or allocations may not be reflected in the strategies and products that KKR offers or invests, including strategies and products to which Mr. McVey provides investment advice to or on behalf of KKR. It should not be assumed that Mr. McVey has made or will make investment recommendations in the future that are consistent with the views expressed herein, or use any or all of the techniques or methods of analysis described herein in managing client or proprietary accounts. This release may contain projections or other forward‐looking statements. Neither KKR nor Mr. McVey assumes any duty to update such statements.

Media:
KKR
Kristi Huller or Cara Kleiman
212-750-8300
media@kkr.com

Source: KKR & Co. L.P.

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