KKR releases 2024 mid-year global macro outlook

KKR released its 2024 mid-year global macro outlook by Henry McVey, CIO of KKR‘s Balance Sheet and Head of Global Macro and Asset Allocation. McVey and his team explain why they believe the current economic cycle has further to run, despite an environment of heightened volatility and political complexity that they envision in the second half of 2024. Several factors underpin the team’s constructive outlook, including an encouraging technical backdrop, a belief that the company has entered a structurally higher level of productivity in the U.S., a stronger global employment market versus prior cycles, central bank balance sheets that are still plump relative to history, and a surprisingly strong global capex cycle. They also highlight several notable updates since their 2024 Outlook: Stronger conviction in the importance of owning more non-correlated assets, given a flatter frontier for expected returns amidst heightened portfolio volatility. More pronounced mismatch between energy supply and demand given electrification needs and the growth of energy-intensive users such as data centers, semi fabs, EV battery plants and steel mills. Broadening of earnings growth across sectors and geographies, which we expect will bring more balance to the equity markets. More sustained deficits amidst election volatility, which reinforce our Regime Change thesis and continued belief that the deficit will stabilize at historically wide levels under either U.S. presidential administration. Greater focus on the positive path for productivity.