KKR's Kravis on 'Sticky' Inflation, Europe and Private Credit

Macroeconomic Outlook - Globalization is being rewired around security, resilience, and regional blocks, with Asia as a prime example [1] - The rules-based global economy is shifting towards transactional great power competition, creating opportunities [2] - The US administration aims for a more level playing field, with private activity playing a significant role in energy and data infrastructure due to capital needs and national security concerns [3] - Inflation is expected to be stickier globally, and tariffs will eventually impact companies or customers [6] - The current US economy resembles a "K-shaped" economy, widening the gap between the wealthy (those with assets) and those living paycheck to paycheck [7] Investment Strategy & Opportunities - The firm is a strong believer in Europe, having invested over $25 billion this year alone [1] - Germany's "made for Germany" program requires external capital beyond the capacity of its large companies, creating investment opportunities [4] - Key investment areas include security, defense and dual technology, and critical resources, focusing on resilience [4][5] - Private credit is generally viewed as not posing a systemic risk, despite concerns about firms entering the market without sufficient expertise [9][10][11] Financial Considerations - With inflation around 3% and a ten-year treasury yield slightly above 4%, the real rate is only about 1% [5]