CNBC Fed Survey, Sept 16, 2015

CNBC Fed Survey – September 16, 2015 Page 1 of 27

FED SURVEY September 16, 2015

These survey results represent the opinions of 51 of the nation’s top money managers, investment strategists, and professional economists. They responded to CNBC’s invitation to participate in our online survey. Their responses were collected

on September 10-14, 2015. Participants were not required to answer every question. Results are also shown for identical questions in earlier surveys.

This is not intended to be a scientific poll and its results should not be extrapolated beyond those who did accept our invitation.

1. Will the Federal Reserve raise the federal funds rate at its September meeting?

49% 47%

5%

49%

43%

8%

0%

10%

20%

30%

40%

50%

60%

Yes No Don't know/unsure

Aug 25 Sep 16



2. Will the Federal Reserve raise the federal funds rate in 2015?

84%

92%

82%

67%

80%

11%

5%

15%

23%

10%

5%

9% 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Apr 28 Jun 16 Jul 28 Aug 25 Sep 16




3. If the Fed does not hike this year, which two factors from the following list do you believe will most likely be the reason?

32%

59%

12%

47%

32%

57%

60%

29%

24%

7%

61%

55%

31%

16%

10%

0% 10% 20% 30% 40% 50% 60% 70%

Weak overseas growth

Declining inflation

Concern over market reaction to a hike

Weak US economic growth

Weak payroll growth

Jun 16 Aug 25 Sep 16



4. What is your measure of full employment in the U.S.?

4.80% 4.80% 4.70% 4.72%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

Apr 28 Jun 16 Jul 28 Sep 16

Surv

ey a

vera

ge

Survey dates



5. How serious a concern is China for the US economy?

0%

7%

21%

16%

12%

12%

16%

16%

0%

0%

0%

16%

20%

18%

10%

12%

18%

6%

0%

0%

0% 5% 10% 15% 20% 25%

1

2

3

4

5

6

7

8

9

1010=H

igh

est

leve

l of

seri

ou

snes

s

1=N

ot

seri

ou

s a

t al

l1=N

ot

seri

ou

s at

all

Aug 25 Sep 16

Averages:

Aug 25: 5.1 Sep 16: 4.6



6. Is the Fed paying too much attention to extreme market swings in setting the appropriate monetary policy?

43%

49%

8%

0%

10%

20%

30%

40%

50%

60%




7. What best describes your view of communication from Fed chair Janet Yellen and from Fed governors and presidents of their views on monetary policy?

8%

34%

50%

8%

64%

4%

28%

4%

0%

10%

20%

30%

40%

50%

60%

70%

Talk too much Don't talk enough Talk the right

amount

Don't know/unsure

Yellen Fed Govs/Presidents



8. Where do you expect the S&P 500 stock index will be on … ?

2075

2149

2111

2194 2187

2128

2156 2159

2135

2032

2311 2296

2247

2259

2293

2254

2159

1,900

1,950

2,000

2,050

2,100

2,150

2,200

2,250

2,300

2,350

Jul 29 Sep 16 Oct 28 Dec 16 Jan 27'15

Mar 17 Apr 282 Jun 16 Jul 28 Sept 16

Survey Dates

December 31, 2015 December 31, 2016



9. What do you expect the yield on the 10-year Treasury note will be on … ?

3.43% 3.45%

3.19%

2.96%

2.54%

2.57%

2.33%

2.64%

2.62%

2.40%

3.52%

3.04%

3.14%

2.89%

3.24% 3.17%

2.88%

2.0%

2.5%

3.0%

3.5%

4.0%

Jul 29 Sep 16 Oct 28 Dec 16 Jan 27'15

Mar 17 April 28 Jul 16 Jul 28 Sept 16

Survey Dates

December 31, 2015 December 31, 2016



10. What is your forecast for the year-over-year percentage change in real U.S. GDP for …?

Jan

28,

'14

Mar

18

Apr

28Jun 4 Jul 29

Sep

16

Oct

28

Dec

16

Jan

27,

'15

Mar

17

April

28

Jun

16Jul 28

Sept

16

2015 +2.90 +3.02 +3.00 +2.81 +2.75 +2.90 +2.90 +3.02 +2.99 +2.69 +2.70 +2.25 +2.41 +2.43

2016 +2.88 +2.80 +2.84 +2.81 +2.78 +2.70 +2.64

+2.90%

+3.02% +3.00%

+2.81%

+2.75%

+2.90% +2.90%

+3.02% +2.99%

+2.69% +2.70%

+2.25%

+2.41% +2.43%

+2.88%

+2.80%

+2.84% +2.81%

+2.78%

+2.70%

+2.64%

2.0%

2.2%

2.4%

2.6%

2.8%

3.0%

3.2%

3.4%

2015 2016



11. What is your forecast for the year-over-year percentage change in the headline U.S. CPI for …?

2.02%

2.29% 2.27%

2.01%

1.74%

1.17%

1.01% 1.00%

1.17% 1.10%

0.83%

2.17%

2.07%

2.08%

1.96%

2.29%

2.17%

1.89%

0.5%

1.0%

1.5%

2.0%

2.5%

Jun 4 Jul 29 Sep 16 Oct 28 Dec 16Jan 27,'15

Mar 17 April28

Jun 16 Jul 28 Sept16

Survey Dates

2015 2016



12. When do you expect the Fed to hike the fed funds rate and allow its balance sheet to decline?

Survey Date Fed Funds Hike

Average Forecast

Balance Sheet

Average Forecast

April 28, 2014 survey July 2015 October 2015

June 4 survey August 2015 March 2016

July 29 survey August 2015 December 2015

August 20 survey July 2015 Not asked

September 16 survey June 2015 December 2015

October 28 survey July 2015 January 2016

December 16 survey July 2015 February 2016

Jan. 27, 2015 survey September 2015 April 2016

March 17 survey August 2015 April 2016

April 28 survey October 2015 May 2016

June 16 survey October 2015 July 2016

July 28 survey November 2015 June 2016

August 25 survey January 2016 September 2016

September 16 survey November 2015 August 2016



13. How would you characterize the Fed's current monetary policy?

28%

49%

46%

49%

44%

39%

50%

54%

50%

60%

54%

43%

43%

49%

43%

49% 50%

47%

32%

44%

35%

47%

32%

17%

6%

3% 3% 3%

6% 5%

3%

6% 4%

13%

3%

3%

6% 5% 6%

3%

8%

6%

3%

0%

10%

0%

10%

20%

30%

40%

50%

60%

70%

Jul 31,'12

Jul 29,'14

Aug 20 Sep 16 Oct 28 Dec 16 Jan 27,'15

Mar 17 Apr 28 Jun 16 Jul 28 Sept 16

Too accommodative Just right Too restrictive Don't know/unsure

Too accomodative

Don't know/unsure

Too restrictive

Just right



14. Where do you expect the fed funds target rate will be on … ?

Jul 30Sep17

Oct29

Dec17

Jan28

'14

Mar18

Apr28

Jun 4 Jul 29Aug20

Sep16

Oct28

Dec16

Jan27,

'15

Mar17

April28

Jun16

Jul 28Aug25

Sept16

Dec 31, 2015 0.97% 0.92% 0.82% 0.70% 0.72% 0.83% 0.99% 0.68% 1.05% 0.89% 0.98% 0.89% 0.83% 0.73% 0.71% 0.54% 0.53% 0.47% 0.37% 0.37%

Dec 31, 2016 1.99% 2.13% 2.04% 1.93% 1.75% 1.84% 1.46% 1.56% 1.41% 1.12% 1.17%

0.97% 0.92%

0.82%

0.70% 0.72%

0.83%

0.99%

0.68%

1.05%

0.89%

0.98%

0.89%

0.83%

0.73% 0.71%

0.54%

0.53%

0.47%

0.37%

0.37%

1.99%

2.13%

2.04%

1.93%

1.75%

1.84%

1.46%

1.56%

1.41%

1.12%

1.17%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Dec 2016

Dec 2015



15. At what fed funds level will the Federal Reserve stop hiking rates in the current cycle? That is, what will be the terminal rate?

3.16% 3.20%

3.30%

3.17%

3.11%

3.04%

2.85%

3.06%

2.98%

2.79%

2.69%

2.0%

2.5%

3.0%

3.5%

4.0%

Aug

20

Sep

16

Oct 28 Dec

16

Jan

27,'15

Mar

17

Apr

28

Jun

16

Jul 28 Aug

25

Sept

16

Survey Dates



16. When do you believe fed funds will reach its terminal rate?

Survey Date Forecast

August 20 survey Q4 2017

September 16 survey Q3 2017

October 28 survey Q4 2017

December 16 survey Q1 2018

Jan. 27, 2015 survey Q1 2018

March 17 survey Q4 2017

April 28 survey Q1 2018

June 16 survey Q1 2018

July 28 survey Q2 2018

August 25 survey Q3 2018

September 16 survey Q1 2018



17. Has the U.S. stock market already discounted a fed funds rate hike by the Federal Reserve this year?

56%

53% 53%

47%

61%

50%

55% 56%

36% 38%

47%

50%

39% 38%

36%

38%

8% 9%

0%

3%

0%

12%

10%

6%

0%

10%

20%

30%

40%

50%

60%

70%

Dec 16 Jan 27 Mar 17 Apr 28 Jun 16 Jul 28 Aug 25 Sep 16

Survey dates


Yes

No

Don't know/unsure



Has the U.S. bond market already discounted a fed funds rate hike by the Federal Reserve this year?

42%

67%

62%

43%

60%

56%

33% 35%

52%

40%

3%

0%

3% 5%

0% 0%

10%

20%

30%

40%

50%

60%

70%

80%

Apr 28 Jun 16 Jul 28 Aug 25 Sep 16

Survey dates


Yes

No

Don't know/unsure



18. What is the single biggest threat facing the U.S. economic recovery?

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

European recession/financial crisis

Tax/regulatory policies

Slow job growth

Inflation

Deflation

Debt ceiling

Rise in interest rates

Geopolitical risks

Global economic weakness

Slow wage growth

Other

Don't know/unsure

Europeanrecession/financial

crisis

Tax/regulatory

policies

Slow jobgrowth

InflationDeflationDebt

ceiling

Rise ininterest

rates

Geopolitical risks

Globaleconomicweakness

Slow wagegrowth

OtherDon't

know/unsure

Apr 30 20%31%20%0%2%2%11%0%

Jun 18 15%28%20%3%3%0%13%0%

Jul 30 8%30%22%0%2%2%10%14%4%

Sep 17 4%27%22%2%0%4%18%7%2%

Oct 29 8%29%24%3%3%3%8%13%0%

Dec 17 5%32%29%2%0%2%15%2%2%

Jan 28 '14 7%21%30%2%0%0%12%21%0%

Mar 18 10%23%26%3%5%0%5%18%0%

Apr 28 3%26%21%3%5%0%8%18%13%0%

Jul 29 12%29%12%6%3%0%12%12%12%3%

Sep 16 6%26%29%6%3%0%6%11%11%3%

Oct 28 31%18%15%3%3%0%10%8%8%3%

Dec 16 40%14%14%3%6%0%3%14%3%0%

Jan 27 '15 0%13%9%0%0%0%6%16%41%6%16%0%

Mar 17 6%14%0%3%6%0%6%8%28%17%14%0%

April 28 3%11%8%3%0%0%6%11%28%8%19%3%

Jun 16 3%17%3%0%0%0%14%25%22%6%11%0%

Jul 28 6%21%9%0%0%0%12%6%29%9%9%0%

Sept 16 0%16%2%0%4%0%0%8%45%8%14%2%



FED SURVEY April 30,

19. In the next 12 months, what percent probability do you place on the U.S. entering recession? (0%=No

chance of recession, 100%=Certainty of recession)

Aug11,

'11

Sep19

Oct31

Jan23,

'12

Mar16

Apr24

Jul31

Sep12

Dec11

Jan29,

'13

Mar19

Apr30

Jun18

Jul30

Sep6

Oct29

Dec17

Jan28

'14

Mar18

Apr28

Jul29

Sep16

Oct28

Dec16

Jan27

'15

Mar17

April28

Jun16

Jul28

Sept16

Series1 34.0 36.1 25.5 20.3 19.1 20.6 25.9 26.0 28.5 20.4 17.6 18.2 15.2 16.2 16.9 18.4 17.3 15.3 16.9 14.6 16.2 15.0 15.1 13.6 13.0 16.4 14.7 15.1 17.4 18.6

34.0%

36.1%

25.5%

20.3%

19.1%

20.6%

25.9%

26.0%

28.5%

20.4%

17.6%

18.2%

15.2%

16.2% 16.9%

18.4%

17.3%

15.3%

16.9%

14.6%

16.2%

15.0%

15.1%

13.6% 13.0%

16.4%

14.7%

15.1%

17.4%

18.6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Survey Dates




20. What is your primary area of interest?

Comments: Marshall Acuff, Silvercrest Asset Management: Global markets need an affirmation of US growth. If the Fed raises rates in

September, stock markets will rise because the Fed has provided that affirmation of US growth. Failure to raise rates might be construed that the Fed is concerned about US growth. Markets would fall because of the perception that global growth may be at greater

risk. Dean Baker, Center for Economic and Policy Research: Given weak wage growth and well below target inflation, it is difficult to see

why the Fed would raise rates this fall. Jim Bianco, Bianco Research: The "data dependent" Fed has all it needs to hike rates. If they do not, it is because of "financial

stability" concerns. If they do hike, they are announcing the stock market's volatility does not matter. Either way, September 17’s

Economics 53% Equities

21%

Fixed Income

11%

Currencies 0%

Other 15%




decision will send a powerful message. Robert Brusca, Fact and Opinion Economics: The Fed has a problem. A zero rate is no longer helping the economy much. And

the Fed is nervous that it has been too accommodative for too long. But its policy statement is a rate hike killer. Inflation is NOT on a path to 2% in this galaxy (earth to Fed...). If the Fed REALLY wants to hike rates it needs to change its policy statement or it could have

its rate-hiking hands tied for a long time. The international scene is going to keep inflation low. Meanwhile, US growth is only OK. You have to buy into the U3 definition of unemployment to think there is any inflation risk. I don't. The US remains under disinflation pressure

and will for some time. There is no appreciation of that in policy circles. The Fed is haunted by past mistakes, keeping it from dealing with current events.

Neil Dutta, Renaissance Macro Research: If the US economy operated in a vacuum, the odds of a rate hike in September would easily clear 50%. The labor market continues to pressure the FOMC in the direction of a hike. If the Fed decides to pass on September,

the delay will be only temporary. A rate hike this year remains extremely likely.

Mike Englund, Action Economics: The combination of a small hike in the Fed funds rate target with hand signals of a "one and done" strategy for 2015 would likely raise rather than lower equity prices, and would finally put an end to the market's fanatical focus on rate

"lift off" timing. There are no adverse economic consequences of funds rate increases from zero to the 2% area if the climb is gradual, i.e. starts early, and a lifting of short rates above the zero-bound would allow more healthy activity at the short end of the debt

market. Kevin Giddis, Raymond James/Morgan Keegan: The Fed's message to the markets could be the single most important event of




the year. If they raise rates, clearly state why they did, if they don't, ditto. If there is confusion, it currently lies at the feet of the Fed. Stuart Hoffman, PNC Financial Services Group: It is time for the

FOMC to start bringing monetary policy slowly out of its "self-induced coma" in response to much improved vital signs for the US economy. After perhaps an initial stock market sell-off to a funds rate hike, the stock market will rally back in response to the positive implications

for the US economy and corporate profits. Art Hogan, Wunderlich Securities: The Fed may well do the right (raise rates in Sept) thing at the wrong time and still not move

markets much as we have been pricing this move in for a while. Constance Hunter, KPMG LLP: The Fed should raise in September as the economy is strong enough to withstand a normal low-rate

environment. In addition to a large balance sheet the Fed also needs to consider lags between policy action and the impact on the real economy. #MindTheLag

Hugh Johnson, Hugh Johnson Advisors: The most important question that faces all investors is, "Does the recent/current decline in equity prices signal the end of a bull market and start of a bear

market or a correction in an ongoing bull market?" Based upon the performance of important monetary and economic variables the answer would appear to be the latter. Whether the Federal Reserve raises interest rates in September, October, or December will not

change that forecast. A change in policy has been fully discounted by the financial markets. Whether or not the Chinese economy slows MAY affect that forecast depending on (a) the extent of the slowdown and (b) the degree to which the slowdown gets

transmitted through declining commodity prices and world trade. We cannot quantify outcomes for this with any level of confidence, but I suspect that the slowdown in China will be minimal. Hence...only a correction, but my fingers are crossed.




John Kattar, Ardent Asset Advisors: Some will ask how the subdued economic and inflation backdrop justifies a Fed hike. A better question is: what emergency justifies a continuation of ZIRP,

a policy that had never existed before the financial crisis. A Fed hike has been well discounted - the only question is when. The Fed should begin the process of normalization, while the effects on the economy and markets are likely to be minimal.

David Kotok, Cumberland Advisors: This is a long drum roll. It is time to take the shot and get away from zero.

Subodh Kumar, Subodh Kumar & Associates: Markets are likely changing drivers and hence the global volatility expansion. Markets were hooked up to steady state expectations but that is not the reality. Driven by momentum, markets focused on weakness as

residing in Europe, which was obvious. As well as weakness for Latin America, the newer change has been in growth competition within Asia, including intercountry exchange rates, with the pullback in Renminbi/US dollar levels not a singular catalyst. Domestic

challenges also loom in the western hemisphere after holidays and Labor Day in North America, this time amid electioneering. Geopolitical challenges remain. Classically, capital markets do go

from the basics to exotics and then back again, which appears to be reoccurring. Amid the ballyhoo over share buybacks and M&A that is classical late in a cycle, the reality is that the delivery of operating improvement takes longer, if it comes at all. Pending clarity for

2017, we envision a trading equity channel with recent highs at the upper end and the bottom moderately below recent correction levels. Rotation turn would be indicated from the financial sector in equities, from commodities and not least from currency stabilization. It is time

for the investment and corporate focus to be on the basics. Guy LeBas, Janney Montgomery Scott: A Fed rate hike at the September meeting is basically a coin flip. We're calling for a split-




the-baby outcome in which policymakers hike 10 – 15 bps. This achieves several aims. One, it ends the liftoff timing debate. Two, it refocuses the dialog on the pace, not initial timing, of rate hikes. Three, it doesn't risk "shocking" risk asset markets.

John Lonski, Moody's: The now simultaneous price deflation afflicting many of the US’s exports and imports may help to (i) prevent the annual growth rate of core business sales from rising

much above 2% and (ii) keep core PCE price index inflation under 1.6%. Drew Matus, UBS Investment Research: Zero rates impede

economic growth in the US and are a source of imbalance in the world given the outlook. Rob Morgan, Sethi Financial Group: The Fed will hike in 2015,

just not at the September meeting. Joel Naroff, Naroff Economic Advisors: Given all the Fed Fatigue we are already suffering, the failure of the FOMC to hike rates in

September, which would raise the possibility of no move for three more months, would amount to cruel and unusual punishment.

James Paulsen, Wells Capital Management: The fact that the financial markets have stabilized somewhat without any overt assurance from the Fed that they will postpone a rate hike until the financial markets are more stable probably gives the Fed confidence

that the markets will be able to handle a rate hike next week. Lynn Reaser, Point Loma Nazarene University: The Fed should not focus on market moves unless they undermine the health of the

overall financial system. A rate hike might well drive stock prices briefly downward, but the decline would probably be followed by a rebound as investors see attractive prices in a growing US economy. Ironically, a September rate hike might subdue much of the recent




volatility that has been based on a "will they or won't they" debate. Chris Rupkey, Bank of Tokyo-Mitsubishi: If they don't start raising rates, FICC on Wall Street is going down the tubes.

John Ryding, RDQ Economics: There is no justification based on the Fed's data dependency for keeping interest rates at zero. The economy is virtually at full employment and the low inflation

readings are a result of a positive supply-side shock that will have only a transitory impact on holding inflation down. The longer the Fed postpones the inevitable monetary renormalization of monetary policy, the greater the risks to financial stability

Allen Sinai, Decision Economics: It is time for the Fed to get on with it.

Hank Smith, Haverford Investments: The Fed's job would be much easier with better fiscal policy (tax reform and regulatory relief) and that is even truer in the euro zone.

Richard Steinberg, Steinberg Global Asset Management: Let's just get this 0.25% bump in fed funds over with so we can move on. Like a kid in the car, "Are we there yet?"

Diane Swonk, Mesirow Financial: History won't be determined by liftoff, but the trajectory of rates thereafter, which includes communications. If a mistake is to be made, it will be made in the

next six months. Mark Vitner, Wells Fargo: We are looking for the Fed to raise the federal funds rate a quarter percentage point and reduce forward

guidance -- a tightening and an ease. We feel fairly certain about the latter but are less sure on the former. They may have boxed themselves in. Reducing guidance in September would likely make it tougher to raise rates later this year. Either way, we should get




some answers (that matter) on Thursday. Scott Wren, Wells Fargo Investment Institute: The Fed, in a way, has its back to the wall. All year long Chairwoman Yellen has

been telling the markets this is the year to start down the road to "normalization" (in Fed-speak of course). For the sake of credibility, we think one hike is in the cards this year, likely in December. Saying that, however, we believe the Fed doesn't need to do

anything this year based on the economic growth we expect and the inflation we expect looking into next year. The Fed is in a tough spot to be sure.

Documents

CNBC Fed Survey, Sept 16, 2015