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KKR Releases 2023 Global Macro Outlook

By: via Business Wire

Henry McVey: Investors Should ‘Keep it Simple’ in 2023

KKR, a leading global investment firm, today released its 2023 Global Macro Outlook by Henry McVey, CIO of KKR’s Balance Sheet and Head of Global Macro and Asset Allocation (GMAA).

In “Keep it Simple,” McVey and his team explain that investors will likely have an easier time navigating inflation’s negative impact on corporate earnings and consumer balance sheets in 2023 than they did with record high inflation in 2022. As such, they suggest that investors should selectively accelerate deployment into periods of dislocation over the next 12 to 18 months.

The following points underpin the GMAA team’s latest thinking:

  • Rate of Change Matters – While we still see a higher resting heart rate for inflation this cycle, we believe that inflation peaked in the latter half of 2022.
  • Earnings – We have higher conviction that earnings will decline in 2023 and will only rebound modestly in 2024.
  • Labor – We are more convinced that the labor shortage in the U.S. is structural in nature, given the intersection of demographic trends and pandemic-related behavioral changes.
  • Housing Prices Under Pressure – We now forecast modest home price deceleration in the U.S. in 2023 and 2024.
  • Goods Deflation, Services Inflation – We have higher conviction in our goods deflation thesis and believe that inflation has shifted to the services sector.
  • Asynchronous recovery – We see a wide range of inflation and monetary profiles across geographies and continue to favor selectivity across regions.
  • Real Rates – Despite near record tightening, we see real rates staying below 3% this cycle. By comparison, the Fed brought real rates above three percent at least one time each decade from the 1960s through the early 2000s.

In light of these developments, McVey and his team identify the following themes for investors to consider in the year ahead:

  • Buy Simplicity Not Complexity at this Point in the Cycle – We favor simple credit over equities.
  • Real Assets – We still favor collateral based cash flows and believe that real assets and energy in particular could be important hedges if the dollar loses strength in 2023.
  • Ongoing Labor Shortages – We see labor shortages accelerating the trend towards automation and digitalization and leading corporations to focus more on technology-driven productivity gains.
  • Resiliency and the Security of Everything – We have shifted from a period of benign globalization to one of great power competition and as such, countries and corporations are increasingly prioritizing redundancy across supply chains and in critical sectors such as energy, data, food, pharmaceuticals, technology, water, and transportation.
  • Energy Transition – This theme is probably as massive as the Internet opportunity was around the turn of the century. However, unlike the Internet, which was a deflationary force, the energy transition is an inflationary one.
  • Normalization and Revenge of Services – U.S. consumption is beginning to normalize, with services gaining wallet share at the expense of goods.

In addition to the aforementioned insights and themes, the report details the GMAA team’s updated views on growth, interest rates, commodities, currencies, and asset allocation.

Links to access this report in full 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.
  • For an archive of previous publications please visit

About Henry McVey

Henry H. McVey joined KKR in 2011 and is Head of the Global Macro, Balance Sheet and Risk team. Mr. McVey also serves as Chief Investment Officer for the Firm’s Balance Sheet, oversees Firmwide Market Risk at KKR, and co-heads KKR’s Strategic Partnership Initiative. As part of these roles, he sits on the Firm’s Investment Management & Distribution Committee and the Risk & Operations Committee. 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). Learn more about Mr. McVey here.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at and on Twitter @KKR_Co.

The views expressed in the report and summarized herein are the personal views of Henry McVey of KKR and do not necessarily reflect the views of KKR or the strategies and products that KKR offers or invests. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. This release is prepared solely for information purposes and 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 contains projections or other forward-looking statements, which are based on beliefs, assumptions and expectations that may change as a result of many possible events or factors. If a change occurs, actual results may vary materially from those expressed in the forward-looking statements. All forward-looking statements speak only as of the date such statements are made, and neither KKR nor Mr. McVey assumes any duty to update such statements except as required by law.


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