Bloomberg Surveillance · Saturday, September 19, 2026
Henry McVeigh, partner at KKR, outlines a 'regime change' in the global economy characterized by higher government deficits, increased geopolitical tensions, and a messy energy transition. He argues that pre-COVID, central banks struggled to generate inflation, but the pandemic's fiscal stimulus altered this dynamic. McVeigh also highlights the positive correlation between stocks and bonds as a key aspect of this new regime.
“So pre-COVID, if you think about it, coming out of the GFC, we had secular stagnation, right? The central banks could not engender inflation in the system.”
“When COVID hit, you had a huge amount of fiscal stimulus come in the system. The money multiplier started to work, and we went into what we call a regime change. Bigger deficits, governments are spending more.”
“More geopolitics, messy energy transition, and more things that are going to bump into.”
“So a couple of things I'd say at the heart of what we're talking about is that stocks and bonds are now positively correlated.”