Global Macro Trends: Play Your Game

KKR

Henry McVey

Research

60 Pages

KKR explores how COVID-19 is accelerating existing macro trends, reshaping growth, policy, and asset allocation. The paper argues the recovery will resemble a “square root” rather than a V-shape, with lasting structural damage. It also highlights record debt levels and rising policy intervention as forces that could redefine long-term returns.

Key Takeaways

Square Root Recovery Path: U.S. GDP rebounds sharply early but then slows, with output remaining below prior trend through 2021 despite an initial surge off 2020 lows.
Debt Levels Surge Globally: Global debt rises above 320% of GDP, increasing reliance on central banks and raising long-term concerns about financial stability and future policy flexibility.
Policy Intervention Expands: Central bank balance sheets grow by over $6 trillion in months, reinforcing lower rates and compressing risk premiums across both public and private assets.
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