Name: Peak tariffs are in, says KKR Henry McVey
Uploaded: 2026-01-21T22:03:31+00:00
Duration: 294 s

Speakers

Henry McVey — KKR Global Macro and Asset Allocation Head

Summary

Henry McVey of KKR says the post-COVID regime features higher inflation, bigger deficits, geopolitics, and a messy energy transition, so investors should favor nominal-GDP-linked assets and quality. He is constructive on Asia, especially Japan, India, Southeast Asia, Korea, and Taiwan, and also likes Spain within Europe. In credit, he sees normalization rather than crisis and favors asset-based finance, while watching Japan's JGB normalization.

McVey expects a higher-inflation regime with bigger deficits and more geopolitics.
He favors nominal-GDP-linked real assets, infrastructure, and quality.
He is active and constructive on Japan, India, Southeast Asia, Korea, Taiwan, and broader Asia.
Within Europe, he prefers peripheral markets such as Spain.
He sees healthcare and financials outperforming as leadership broadens beyond the Magnificent Seven.
He expects stronger non-dollar currencies and says peak tariffs are in.
In private credit, he views direct lending as normalizing and likes asset-based finance spreads.
He is watching Japan's JGB market normalization as a key rates setup.

Ideas

Henry McVey KKR Global Macro and Asset Allocation Head 0:58

Own nominal-GDP and inflation-linked hard assets.

McVey says the post-COVID regime is different: bigger deficits, more geopolitics, a messy energy transition, and a higher resting inflation rate. He wants to own more assets linked to nominal GDP; in private markets that means infrastructure and lending, and he favors hard assets that do well when there is some inflation in the system.

Henry McVey KKR Global Macro and Asset Allocation Head 1:15

Japan: inflation, reform, cheap valuations.

McVey has been incredibly active in Japan and expects the market to do well. Japan is moving from deflation to inflation, can borrow cheaply in a higher nominal GDP environment, has a government committed to corporate reform, rising ROE, and many stocks trading cheaply, including below book value.

Henry McVey KKR Global Macro and Asset Allocation Head 1:17

Southeast Asia under-owned with earnings inflection.

Southeast Asian markets are moving and remain under-owned, while earnings have inflected upward and currencies outside the dollar should strengthen, supporting that part of the market.

Henry McVey KKR Global Macro and Asset Allocation Head 1:35

Non-dollar currencies strengthen on peak tariffs.

McVey thinks peak tariffs are in and expects stronger currencies outside the dollar. If those currencies strengthen while earnings rise and stocks are cheap, that part of the market should move.

Henry McVey KKR Global Macro and Asset Allocation Head 1:47

KKR active in India; market outperforms.

McVey says KKR has been incredibly active in India and expects those markets to do well as part of the under-owned Asia opportunity, with earnings inflecting upward, stronger non-dollar currencies, and cheap stocks.

Henry McVey KKR Global Macro and Asset Allocation Head 1:51

Spain attractive versus core Europe.

In Europe, McVey is focused more on the peripheries, and he says Spain relative to the core of Europe remains very attractive for KKR.

Henry McVey KKR Global Macro and Asset Allocation Head 2:26

Upgrade to quality as spreads compress.

There is so much liquidity in the market relative to issuance that credit spreads are crashing. Investors can move up from triple-B to triple-A credit without giving up much, and in the S&P/quality index they can buy quality more cheaply, so McVey says they should be doing that.

Henry McVey KKR Global Macro and Asset Allocation Head 2:46

Korea and Taiwan cheap productivity plays.

McVey sees a productivity boom, and while the US just had 5% productivity, the cheaper way to play it may be through Korea or Taiwan and Japan, where many markets trade at less than book value.

Henry McVey KKR Global Macro and Asset Allocation Head 3:06

Healthcare outperforms as US leadership broadens.

With the Mag 7 having a stranglehold on the global market and most investors overweight the US, McVey expects health care to do better as leadership broadens; he says this was the story in 2025 and will be again in 2026, causing investors to chase.

Henry McVey KKR Global Macro and Asset Allocation Head 3:08

Financials outperform as market breadth widens.

McVey expects financials to do better as market leadership broadens beyond the Mag 7 and the heavily overweight US market; he sees this broadening as the story for 2025 and 2026.

Henry McVey KKR Global Macro and Asset Allocation Head 3:08

Asia under-owned; earnings, currencies, valuations support.

McVey thinks Asia will do better: the region is under-owned, earnings have inflected upward, currencies outside the dollar should strengthen, and stocks are cheap, so that part of the market should move.

Henry McVey KKR Global Macro and Asset Allocation Head 3:49

Asset-based finance spreads remain attractive.

McVey says the noise around direct lending is not the beginning of a crisis but the beginning of credit normalization. KKR is tilting toward real assets and nominal-GDP-linked asset-based finance, where spreads remain very attractive.

Henry McVey KKR Global Macro and Asset Allocation Head 4:07

JGB market needs to normalize.

Japan is the epicenter for negative real rates, and as it moves from deflation to inflation, the JGB market needs to normalize. The central bank and prime minister cannot let rates rise too fast, so McVey sees tension in Japanese rates; this is a key setup to monitor.

Peak tariffs are in, says KKR Henry McVey

Summary

Ideas

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