The Meb Faber Show - Better Investing KKR's Henry McVey - Regime Change is Here: Think Differently About Asset Allocation | #592
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Aug 4, 2025 Henry McVey, Head of Global Macro & Asset Allocation at KKR, delves into the shifting macroeconomic landscape and the implications of a declining US dollar. He highlights emerging opportunities in global markets, particularly in Europe and Japan, while offering astute asset allocation strategies. McVey draws parallels between productivity advancements driven by AI and historical market transformations. He also tackles the economic impact of geopolitical tensions and emphasizes the need for adaptive investment approaches in a post-COVID world.
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Macro Regime Change Overview
- Post-COVID, government deficits, energy transition, geopolitics, and sticky inflation mark a macro regime change.
- Investors must rethink asset allocation as traditional monetary and fiscal policies evolve.
US Dollar and Productivity Duality
- The US dollar is very expensive historically and likely to weaken due to downgraded credit ratings.
- However, US productivity growth driven by technology supports a strong US equity market despite a weaker dollar.
US Stock Valuation and Drivers
- US stock market is reasonably valued, aided by lower taxes and migration to capital-light, service-based businesses.
- Multiple expansions are limited, but earnings and dividends growth remain strong drivers for returns.
