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8/21/2019 CNBC Fed Survey, Sept 16, 2014
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CNBC Fed Survey September 16, 2014Page 1 of 29
FED SURVEYSeptember 16, 2014
These survey results represent the opinions of 37 of the nations top money managers, investment
strategists, and professional economists.
They responded to CNBCs invitation to participate in our online survey. Their responses were collecte
on September 11-13, 2014. 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 whodid accept our invitation.
1.By how much do you believe the Fed will, on net, increase ordecrease the size of its balance sheet in 2015?
-$104
-$146
$24
$60
-$83
-$200
-$150
-$100
-$50
$0
$50
$100
Billions
Mar 18 Apr 28 Jul 29 Aug 20 Sep 16
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FED SURVEYSeptember 16, 2014
2.Will the Federal Reserve vote in October to end its QE program
95%
5%
0%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Yes No Don't know/unsure
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FED SURVEYSeptember 16, 2014
3.What is the probability the Fed will begin a new QE program in
the 12 months or two years after it concludes the current QEprogram?(0%=No chance of new QE, 100%=Certainty of new QE)
0%
10%
20%
30%
40%
50%
60%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Chance of new QE
12 months 24 months
Averages:
12 months:10.0%
24 months:14.0%
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FED SURVEYSeptember 16, 2014
4.The Fed will remove the phrase considerable time from its
monetary policy statement in ...
41%
24% 24%
11%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
September October December After December Don'tknow/unsure
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FED SURVEYSeptember 16, 2014
5.Overall, how do you rate the clarity and credibility of Fed
communications?
60%61%
63%
68% 64%62%
73%
39% 39%38%
32% 36%
35%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Oct 29 Dec 17 Jan 28 Mar 18 Apr 28 Jul 29 Sep 16
Survey dates
Very/somewhat clear and credible Somewhat not/not very clear and credible
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FED SURVEYSeptember 16, 2014
6.Which of these is the bigger risk to your forecasts for Fed polic
in 2014?
26% 26%
40%
9%
31%
22%
47%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Fed will be moredovish than I
expect
Fed will be morehawkish than I
expect
Risks are balanced Don't know/unsure
Jul 29 Sep 16
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FED SURVEYSeptember 16, 2014
Which of these is the bigger risk to your forecasts for Fed policy i
2015?
49%
34%
14%
3%
53%
39%
8%
0%
0%
10%
20%
30%
40%
50%
60%
Fed will be moredovish than I
expect
Fed will be morehawkish than I
expect
Risks are balanced Don't know/unsure
Jul 29 Sep 16
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FED SURVEYSeptember 16, 2014
7.Relative to an economy operating at full capacity, what best
describes your view of the amount of resource slack in the U.S.right now for labor?
48%
36%
4%
8%
4%
0%
34%
40%
6%
11%
9%
0%
20%
60%
3%
6%
9%
3%
0% 10% 20% 30% 40% 50% 60% 70%
Considerably more slack now
Modestly more slack now
No difference
Modestly less slack now
Considerably less slack now
Don't know/unsure
July 29 August 20 Sep 16
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FED SURVEYSeptember 16, 2014
Relative to an economy operating at full capacity, what best
describes your view of the amount of resource slack in the U.S.right now for production capacity?
12%
56%
8%
16%
4%
4%
9%
60%
14%
9%
9%
0%
8%
64%
8%
14%
3%
3%
0% 10% 20% 30% 40% 50% 60% 70%
Considerably more slack now
Modestly more slack now
No difference
Modestly less slack now
Considerably less slack now
Don't know/unsure
July 29 August 20 Sep 16
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FED SURVEYSeptember 16, 2014
8.What best describes your view of the most likely outcome from
the current period of extraordinary monetary policy?
34% 34%
26%
6%
17%
44%
22%
17%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
It will end badlywith one or more of
the following: a
stock market crash,high inflation,
recession
The Fed willnavigate a smooth
transition to more
normal policy
Odds are evenly splitbetween either
outcome
Don't know/unsure
July 29 Sep 16
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FED SURVEYSeptember 16, 2014
9.Where do you expect the S&P 500 stock index will be on ?
1857
19131924
1937
1956
2000
20322017
2029
2053
21092075
2149
1,800
1,850
1,900
1,950
2,000
2,050
2,100
2,150
2,200
Dec 17 Jan 28 '14 Mar 18 Apr 28 Jun 4 July 29 Sep 16
Survey Dates
December 31, 2014 June 30, 2015 December 31, 2015
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FED SURVEYSeptember 16, 2014
10. What do you expect the yield on the 10-year Treasury note
will be on ?
3.44%
3.37% 3.32%
3.21%
2.90%
2.83%
2.76%
3.54%
3.24%
3.15% 3.16%
3.43% 3.45%
2.0%
2.5%
3.0%
3.5%
4.0%
Dec 17 Jan 28 '14 Mar 18 Apr 28 Jun 4 Jul 29 Sep 16
Survey Dates
December 31, 2014 June 30, 2015 December 31, 2015
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FED SURVEYSeptember 16, 2014
11. What is your forecast for the year-over-year percentage
change in real U.S. GDP for ?
Jan29,'13
Mar19
Apr30
Jun18
Jul30
Sep17
Oct29
Dec17
Jan28,'14
Mar18
Apr28
Jun 4Jul29
Sep16
2014 +2.56 +2.60 +2.62 +2.56 +2.52 +2.63 +2.53 +2.62 +2.77 +2.78 +2.75 +2.33 +1.89 +2.3
2015 +2.90 +3.02 +3.00 +2.81 +2.75 +2.9
+2.56%+2.60% +2.62%
+2.56%+2.52%
+2.63%
+2.53%
+2.62%
+2.77% +2.78% +2.75%
+2.33%
+1.89%
+2.3%
+2.90%
+3.02% +3.00%
+2.81%
+2.75%
+2.9%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2014 2015
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FED SURVEYSeptember 16, 2014
12. What is your forecast for the year-over-year percentage
change in the headline U.S. CPI for ?
1.78%
2.02% 1.99%2.02%
2.29% 2.27%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
Jun 4 Jul 29 Sep 16
Survey Dates
2014 2015
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FED SURVEYSeptember 16, 2014
13. When do you expect the Fed to allow its balance sheet to
decline?
Note: In the April survey, the question was phrased as: When do you believe the Fed will be
reducing the size of its balance sheet?
0%
5%
10%
15%
20%
25%
30%
Oct
Nov
Dec
Jan'15
Feb
Mar
Apr
May
JunJul
Aug
Sep
Oct
Nov
Dec
Jan'16
Feb
Mar
Apr
May
JunJul
Aug
Sep
Oct
Nov
Dec
Jan'17
AfterJan
Apr 28 Jun 4 Jul 29 Sep 16
Averages:April 28 survey:October 2015
June 4 survey:
March 2016
June 29 survey:
December 2015
Sept. 16 survey:
December 2015
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14. When do you think the FOMC will first increase the fed funds
rate?
0%
10%
20%
30%
40%
50%
60%
April 28 Jun 4 Jun 29 Aug 20 Sep 16
Averages:April 28 survey:
July 2015
June 4 survey:August 2015
July 29 survey:
August 2015
Aug 20 survey:
July 2015
Sep 16 survey:
June 2015
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FED SURVEYSeptember 16, 2014
15. How would you characterize the Fed's current monetary
policy?
28%
43%
17%
13%
49%
43%
6%
3%
46%
49%
3%
3%
49%
43%
3%
6%
0% 10% 20% 30% 40% 50% 60%
Too accommodative
Just right
Too restrictive
Don't know/unsure
July 31, 2012 July 29, 2014 Aug 20 Sep 16
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FED SURVEYSeptember 16, 2014
16. Where do you expect the fed funds target rate will be on ?
Jul 30Sep
17
Oct
29
Dec
17
Jan28
'14
Mar
18
Apr
28Jun 4 Jul 29
Aug
20
Sep
16
Dec 31, 2014 0.28%0.21%0.21%0.20%0.19%0.15%0.27%0.17%0.21%0.16%0.14%
Jun 30, 2015 0.50%0.39%0.40%
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%
Jun 30, 2016 1.53%1.56%
Dec 31, 2016 1.99%2.13%
0.28%
0.21% 0.21% 0.20% 0.19%0.15%
0.27%
0.17% 0.21% 0.16% 0.14%
0.50%
0.39% 0.40%
0.97%0.92%
0.82%
0.70% 0.72%
0.83%
0.99%
0.68%
1.05%
0.89%
0.98%
1.53%1.56%
1.99%
2.13%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Dec 2016
June 2016
Dec 2015
June 2015
Dec 2014
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17. At what fed funds level WILL/SHOULD the Federal Reserve
stop hiking rates in the current cycle? That is, what will/shouldbe the terminal rate?
3.16%
3.44%
3.20%3.39%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Will Should
Aug 20 Sep 16
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18. When do you believe fed funds will reach its terminal rate?
0%
5%
10%
15%
20%
25%
30%
35%
40%
Aug 20 Sep 16
Average:
Aug 20 survey:
Q4 2017
Sep 16 survey
Q3 2017
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FED SURVEYSeptember 16, 2014
19. How much concern do you have that each of the following
could create wider global risks? (1=Not concerned at all,10=Highest level of concern)
5.45.0
4.7
3.1
0
1
2
3
4
5
6
7
8
9
10
Economicweakness in
Europe
Trouble betweenRussia and
Ukraine
ISIS insurgencyand the U.S.
response
Scottishindependence
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20. How big a threat to the U.S. economy are "tax inversions," in
which a U.S. company merges with a foreign company andmoves its tax address overseas? (1=No threat at all,10=Enormous threat)
31%
25%
22%
13%
6%
0%
3%
0% 0% 0%0%
5%
10%
15%
20%
25%
30%
35%
1 2 3 4 5 6 7 8 9 10
Level of concern
Average:2.5
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21. Whats the best solution for tax inversions?
Other:
Eliminate tax on foreign income for US corporations (and individuals too!)
Legislation to encourage the return of cash of US corporations now held abroad
50%
38%
6%
3% 3%
0%0%
10%
20%
30%
40%
50%
60%
Wait forcomprehensiveU.S. corporate
tax reform
Lower top U.S.corporate tax
rate now
Other Raise therequirement for
foreignownership
Don'tknow/unsure
None needed
On average, those selecting this optionthink the top rate should be lowered to 19%
On average, those selecting this option think
the requirement should be raised to 51%
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22. What is the single biggest threat facing the U.S. economic
recovery?
0% 5% 10% 15% 20% 25% 30% 3
European recession/financial crisis
Tax/regulatory policies
Slow job growth
High gasoline prices
Overall inflationDeflation
Debt ceiling
Too little budget deficit reduction
Too much budget deficit reduction
Rise in interest rates
Geopolitical risks
Other
Don't know/unsure
Europ
reces
/fina
cris
Tax/regul
atory
policies
Slow job
growth
High
gasoline
prices
Overall
inflationDeflation
Debt
ceiling
Too little
budget
deficit
reduction
Too
much
budget
deficit
reduction
Rise in
interest
rates
Geopoliti
cal risksOther
Don't
know/un
sure
Apr 30 2031%20%2%0%2%2%2%9%11%0%
Jun 18 1528%20%2%3%3%0%2%13%13%0%
Jul 30 8%30%22%4%0%2%2%0%4%10%14%4%
Sep 17 4%27%22%7%2%0%4%2%4%18%7%2%
Oct 29 8%29%24%3%3%3%3%3%5%8%13%0%
Dec 17 5%32%29%5%2%0%2%2%2%15%2%2%Jan 28 '14 7%21%30%2%2%0%0%2%2%12%21%0%
Mar 18 1023%26%3%3%5%0%0%8%5%18%0%
Apr 28 3%26%21%0%3%5%0%3%3%8%18%13%0%
Jul 29 1229%12%0%6%3%0%0%0%12%12%12%3%
Sep 16 6%26%29%0%6%3%0%0%0%6%11%11%3%
Apr 30 Jun 18 Jul 30 Sep 17 Oct 29 Dec 17 Jan 28 '14 Mar 18 Apr 28 Jul 29 Sep 16
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FED SURVEYSeptember 16, 2014
23. In the next 12 months, what percent probability do you
place on the U.S. entering recession? (0%=No chance ofrecession, 100%=Certainty of recession)
Aug11,
2011
Sep19
Oct31
Jan23,
2012
Mar16
Apr24
Jul31
Sep12
Dec11
Jan29,
2013
Mar19
Apr30
Jun18
Jul30
Sep6
Oct29
Dec17
Jan28
2014
Mar18
Apr28
Jul29
Sep16
Pct. 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
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%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Survey Dates
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FED SURVEYSeptember 16, 2014
24. What is your primary area of interest?
Comments:
Tony Crescenzi, PIMCO: The Fed in the months ahead will begin to
say a long goodbye to its extraordinary monetary accommodation,keeping its exit more a process than an event, hoping throughout tokeep markets and the economy stable.
John Donaldson, Haverford Trust Co.: Many people seem toforget we are at zero interest rates. Which would they prefer; amessage from the Fed that the economy has improved enough thatthey can begin the process of raising rates or a message thateverything is still so weak that we need to stay at zero? We are still
years in time and hundreds of basis points from a restrictive policythat could hamper the economy.
Dennis Gartman, The Gartman Letter: The concerns over Russiaand Ukraine are materially over-blown; Russia's army of conscripts isnot capable of over-running even Ukraine, and the fact that the
Economics
50%
Equities17%
Fixed Income14%
Currencies3%
Other17%
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President of Russia and Ukraine talk far more frequently than iscommonly understood underscores the fact that this situation is not
likely to become more severe than it has been thus far and is farmore likely to become far less severe. Russia and Ukraine "trade"with one another, and trading partners rarely go to extended war.
Kevin Giddis, Raymond James/Morgan Keegan: The momentumtrain towards higher rates is slowly leaving the station. The questionis: How long are the tracks? The Fed will be the principal character innext year's market moves.
Stuart Hoffman, PNC Financial Services Group: The"considerable time" reference in the FOMC statement should bedropped and replaced with something like "current and anticipatedprogress toward dual mandate" at the October FOMC meeting whenthe end of QE is announced.
Hugh Johnson, Hugh Johnson Advisors: Although thegeopolitical risks are meaningful, they are unlikely to derail thecurrent stock market-economic cycle. The most substantial risk
(although not imminent) is rising interest rates. We are currentlywell away from a level that would endanger the current cyclealthough there will be substantial pressure on the Fed to raise ratesin Q1-Q3, 2015. This conclusion is consistent with indicators thattend to lead economic activity. They are not as yet signaling a turnin economic output.
John Kattar, Ardent Asset Advisors: The message has been loudand clear that QE ends in October and rate increases are on the
horizon. In recent years, I give the Fed high marks for transparency- they keep repeating they will do something and then they do it.Count me as a believer. Rate increases are coming by March, andthe first step is to remove the calendar guidance from the statementat this meeting.
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David Kotok, Cumberland Advisors: The markets are notanticipating that energy prices will fall below the marginal cost of
production in the U.S. The risk of that price decline is rising asglobal slowing of growth intensifies.
Subodh Kumar, Subodh Kumar & Associates: Geopolitics and aFederal Reserve in QE exit lead us to expect volatility and to favorquality across assets, not the financial engineering once more infavor. From dislocation risk in Britain to tension with Russia to MiddleEast turmoil to European and U.S. fiscal woes, equity and bondmarkets have overlooked risk. The Federal Reserve has lacked clarity
but appears in dial back of the over accommodation resulting fromQE2, which is likely to be volatile for too-complacent markets.
Guy LeBas, Janney Montgomery Scott: The one thing that couldsend the train veering off course on Wednesday is a decision byYellen to talk up risk premia. Bernanke did the same last summerover concern for the level of yields and the result was problematicfor all investors. This time around it isn't about low yields, but aboutcomplacency in lending markets. With default rates low, we're far
from a danger zone in the credit markets, but Yellen could choose topoint out the problem and try to make it go away early by enforcingloan pricing discipline.
Rob Morgan, V2V Associates: U.S. corporations that are 'taxinverting' themselves out of the country show that the nation isfacing the same problem that many states in the Northeast andMidwest are facing - companies are leaving a hostile tax environmentto go to a friendlier one. Lower the corporate tax rate now, America!
Joel Naroff, Naroff Economic Advisors: The press have done theFed's job of preparing the markets for a change in policy so theFOMC should take advantage of the opening by signaling a tighteningcould come sooner rather than later.
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Lynn Reaser, Point Loma Nazarene University: The Fed hascompleted an orderly exit from its bond purchase program, but
markets are likely to be much less tolerant of rate hikes. The Fedmight get the timing and amount of rate increases just right, but donot count on it. Unfortunately, rate increases are likely to be toosoon and too much or too little and too late.
Allen Sinai, Decision Economics: The U.S. economy finally has"normalized." In a "normal" business expansion, interest ratesshould rise. Zero interest rates make little sense in a normalbusiness expansion.
Hank Smith, Haverford Investments: Even after tapering and thebeginning of the increasing of the fed funds rate, monetary policywill still be very accommodative for several more years.
Diane Swonk, Mesirow Financial: The Fed is hedging what it seesas the greatest downside risk to the economy, which is a recession.It is unclear there is any way out if we skip into another recession.
Peter Tanous, Lynx Investment Advisory: Stock market view ofa world in turmoil: Don't Worry; Be Happy.
Scott Wren, Wells Fargo Advisors: The modest growth/modestinflation economy we have been living with is unlikely to change overthe next 12-24 months. Stocks need to be bought on any pullbacks.This cyclical bull market has more room to run over the next 2-3years.