henry mcveigh, head of global and macro asset allocation at kkr, a global investment firm with roots in private equity. great to have you here. >> thank you. >> let me kick it off with this global story. you're just back from spain, is that right? >> yes. >> and asia. >> asia. >> i want to hear about your trip because the worry out there is that everything is slowing. china was the engine of growth for the world. that's slowing. what do you think is going on out there? >> why don't i start with china, then we'll work towards europe. the message from china is that growth is slower than the consensus. so estimates need to come down. i think the big story is that the export economy in china, they've been the manufacturer to the world. that's starting to slow down. they don't have demand from europe. they don't have demand from the u.s. so i would expect that to start to affect people's perception of china as a growth engine. i still think it will be the single biggest growth vehicle out there, but it just won't be -- if growth was here, it needs to come down. i think we'll go through an

kkr and its 80 businesses globally, we want to work with different industries and different managers but we need the governments collectively to do a better job to help out, to create a growth environment. and i think that's a message that you'll hear from anybody that's in the markets or in the economy in terms of running businesses, which is there's a lot of good things the private sector is doing but now is really a time for the governments to step up and create a path of growth so that we can get out of some of this kind of funk that's been plaguing the global economy. >> we can say that about the u.s. as well because the federal reserve has been the one providing stimulus but we have the fiscal cliff at the end of the year. we need governments to start to focus. >> think of the fiscal cliff which is another example. we don't know whether we'll have a 1% deficit or a 4% deficit in terms of growth. starting the year with a 4% deficit, which if nothing changes that's what you'll have, that's never happened in the history of the united states. think about it. if you're trying to run

i can't imagine kkr is leaving a ton of money on the table. >> i like it better.ike that a competitor is basically distracted for me. >> to jump in it is a great company. >> nice. >> that's stuff. >> good dental floss over there. >> really? >> in the uk? >> how ironic. >> lots of inventory. for sale. >> let's move on shall we? she raised eps guidance. also raised the price target. really, should we get rid of the shares? >> the growth is very, very strong. it's running over 30%. higher than that. as they explore the international tupts. we are definitely there. we think at 36 times, the stock looks very pricey. actually it's 36 times 12 earnings. the entire category would be smaller than the energy category. i think it is realistic to expect when they lack the rehappen intro that sales growth will slow. >> sitting there at 350 million. if they doid do a significant buy back would you immediately raise the price target? >> i would probably raise the price target and i have written about the fact that they could do a dutch auction. they could even spend more than 80

kkr will be one of the largest shareholders in walgreen as well. interesting elements. >> they are keeping skin in the game. >> so, joe, they have not stucked the life out just yet. the other element of this, of course, is what's going on. what will happen to the obamacare and health insurance market and that want plays in to a different element. >> is this back office operations or front office operations. >> they will get huge efficiencies in terms of buying drugs. the other element is that alliance boots, i don't know if you've been to a boot store in europe, the alliance part of this is a wholesaler and that's something that walgreen's doesn't have. the idea of being able to mix that wholesale operation with the distribution -- >> you have to think it has something to do with the cvs caremark. cvs caremark is our prescription benefits manager and made me switch my prescriptions over to cvs. >> the other thing that's probably pretty interesting two different wise prices of drugs. here in the u.s. we pay an enormous but in europe they don't. >> t

think about private he can at this time which firms like blackstone, kkr, carlisle, they brought dozensf companies in the past few years. in many cases paying far too much for them at the market top. now they need badly to offload some of these companies into the open market so they can get them off the books. some of them will be barely profitable. others will simply be stinkers that the brokers will try to entice you to pick up with the hope that a rising tide could lift all boats. the private equity ipos almost as a rule cannot be trusted. and this brings up another important aspect of analyzing ipos. recognize that just because a company can be publically traded doesn't mean it's junction, the point is it would qualify as a mockery of a sham. what i call stocks that shouldn't be shocks in the book, "getting back to you." some of them fit into this category. the regulators don't have a mandate to judge the quality of the ipo. they can make the companies disclose as many facts and financials and they let you judge for yourself. a disinfectant they say. the brokers are deeply conflicte

for kkr, a publicly traded company, a nice wind for them.t at about 2.7 billion. that is at the end of march, they are now because they earned about a third of it, now it's $5.5 billion or so dollars for that company. they did do this deal a number of years ago, but it looks like it will be a 2 to 3 cover. >> as for walgreens. >> cheap shot! >> thank you, the guys that put this company together, alliance boots, will be the largest sungle shareholder of walgreens when the deal is completed in three years time. he he will be a director immediately of the company. he is taking everything in stock. >> and he is getting a very big dividend. that's a very high growth dividend. a very big dividend for a grower. >> and we should look at something in the past, they not going the right way, that is due to the continuing dispute of express scripts. you cannot get your drugs at a walgreen if you're a express scripts customer. they're going to be one of the largest buyers of pharmaceuticals in the world, this deal between alliance boots and walgreens. >>

kkr bought dollar general back in 2009.than 2% in after hours trade in yesterday's session. and in frankfurt this morning, of course they've been active, as well. >> let's take a look at today's other top stories. the country is not immune to the eurozone's issues. >> i would argue eden jones is very small for the time being. sometimes you do see a little bit of a reaction when they come through and they make a change. >> we'll see if others follow. >> aussie airline expects to post its first loss since it was privatized 17 years ago. >> double what their international business was losing last year. points to weekening demand. john paulson has bought the famed hollow ranch in aspen from the sawed cancan saudi prince. something like over $100 million. but it went for just about half of that. >> huge fall in the value of this property. but this is massive amounts of money. >> starbucks has bought a bakery chain for $100 million. are you a big fan of starbuckss food? >> i like the tea. but i always get a little nervous when yo

so manufacture the big private equity funds these days, kkr, carlisle, blackstone have oddly diversifiedway from private equity. how has that changed your calculus in terms of the investment thesis? people always think that if you go to the little guy, the little guy comes up with the billing returns. >> right. >> now that they've become large asset managers, more about effectively selecting the management fee than necessarily the promote how that changes things for you. >> what people want to see is managers who are beginning to get rich if they're successful and good at what they do through carried interest. they don't want to see them get paid on a fixed income stream where if they're unsuccessful or mediocre they continue to get rewarded. >> isn't that where the biggest names have moved in this industry? >> i think they have. they've become more of an asset gatherer than an asset manager. >> you're not pulling funds away from them? >> i think you absolutely have seen funds come down from them. it's harder for the mega funds to raise capital. part of that is this backlash, high fixed