Walk, Don’t Run: Mid Year Update 2022

KKR

Research

56 Pages

KKR Global Institute argues markets have entered a new regime where inflation and supply constraints make the classic 60 40 playbook less reliable. They expect inflation pressure to shift from goods toward services while earnings estimates still look too optimistic. One attention grabber is their view that credit can feel cheaper than equities even after the selloff, implying patience on deployment.

Date published: June 2022

Key Takeaways

Regime change mindset: Diversification needs more than bonds when inflation shocks can hit both stocks and rates.
Earnings risk focus: Margin pressure matters as input costs rise and pricing power separates winners from price takers.
Walk not run: Favor pacing, shorter duration, and selective hard assets until inflation cools and profit expectations reset.

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