Asks about market tensions, whether AI is friend or foe, and if there's underlying macroeconomic stress or just market preoccupation.
speaker1
Henry McVey
Expects robust global growth this year, evident in portfolio companies and earnings. CEOs are focused on 'security of everything' and resiliency (power, data, logistics), especially given Middle East tensions.
Suggests spending on redundancy and independent supply chains could mean high nominal growth but also be inflationary.
speaker1
Henry McVey
Confirms a post-COVID 'regime change' of bigger deficits, government spending, messy energy transition, more geopolitics, and stickier inflation is 'on steroids.'
Notes expansionary signals seem early-cycle, but asks for interpretation of credit market hiccups and private credit issues that some see as late-cycle cracks.
speaker1
Henry McVey
On AI/data centers: Current spending is 5% of GDP (vs. 7% during housing crisis), creating 'haves and have-nots.' Focus should be on finding contracted cash flow, not speculative 'if they build it, they will come' projects.
Henry McVey
On private credit: It's a $1.7T industry but only 1% of global fixed income. Expects huge dispersion and industry consolidation, similar to BlackRock's rise in liquid fixed income.
Henry McVey
Defaults will rise from an unsustainably low 1% rate, and recoveries will be lower. Differentiation will come from recovery rates.