KKR’s McVey Dismisses Stagflation Risk, Sees ‘Decent’ GDP Growth
(Bloomberg) -- KKR & Co.’s Henry McVey said he expects real rates to remain low along with “decent” economic growth, dismissing arguments that stagflation is looming for the U.S.
“Productivity is booming,” McVey, KKR’s head of global macro and asset allocation, said Wednesday in a Bloomberg Television interview. “The idea that we don’t have any GDP growth, particularly at a time when consumers have this much excess savings, I don’t see that.”
KKR is “tilting more toward the reflation camp,” he added.
His comments follow those of Bridgewater Associates co-Chief Investment Officer Greg Jensen, who said earlier in the day that the real danger may be the combination of rising prices and a stagnating economy.
“The problem is stagflation -- that’s the real risk, and so many portfolios are massively exposed,” Jensen said at the Bloomberg Invest virtual conference.
McVey also spoke about KKR’s latest macro report, in which the firm surveyed 50 insurance industry chief investment officers overseeing about $7 trillion of assets.
“Life insurance companies are probably more concerned about deflation because they’ve actually extended the duration of their liabilities and they want to match their assets with their liabilities, so lower rates would be quite problematic,” McVey said. “The property casualty insurance companies are worrying about having replacement costs going up and they’re worrying about reflation or inflation.”
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