KKR's McVey: The Market Got Too Dovish on the Fed

The transcript discusses the market's overly optimistic expectations of Fed easing, suggesting a more cautious approach with a 25 basis point reduction. It analyzes historical instances where the Fed funds rate was significantly above the two-year rate, leading to easing. The discussion compares past economic scenarios from 1989, 1998, 2000, and 2006, highlighting different market outcomes. The speaker concludes with a market outlook, suggesting limited upside due to capped multiples but a protective stance from the Fed and global central banks.

What is the speaker's view on the market's expectation of a 50 basis point cut by the Fed?

• It is irrelevant.

• It is too optimistic.

• It is too pessimistic.

• It is just right.

How many times in history has the Fed funds rate been more than 50 basis points above the two-year rate?

• Three or four times

• Never

• Ten times

• Once

Which year did the market experience a significant upside despite a Fed rate divergence?

• 1998

• 2006

• 2000

• 1989

What does the speaker suggest about the current market's potential for a major recession?

• A major recession is unlikely.

• A major recession is already happening.

• A major recession is likely.

• A major recession is inevitable.

According to the speaker, what is the market capped by on the upside?

• Inflation

• Interest rates

• Corporate earnings

• Multiple expansion