CNBC Fed Survey, April 26, 2016

CNBC Fed Survey – April 26, 2016 of 32

FED SURVEY April 26, 2016

FED SURVEY April 30,

These survey results represent the opinions of 48 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 April 21-23, 2016. 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. At its April meeting, the Federal Reserve will:

0%

0%

100%

0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Raise interest rates

Lower interest rates

Keep rates unchanged

Don't know/unsure




2. After this month’s meeting, the Federal Reserve's next move will most likely be:

88%

10%

0%

3%

90%

10%

0%

0%

94%

4%

0%

2%

0% 20% 40% 60% 80% 100%

Raise interest rates

Lower interest rates

Move to negative interest rates

Launch new quantitative easing

Jan 27 Mar 15 Apr 26




When will the Federal Reserve make its next move?

Jan 27 Survey March 15 Survey April 26 Survey

For those

who said:

Average

month:

For those

who said:

Average

month:

For those

who said:

Average

month:

Raise

interest

rates

(88%)

May 2016

Raise

interest

rates

(90%)

June

2016

Raise

interest

rates

(94%)

August

2016

Lower

interest

rates

(10%)

August

2016

Lower

interest

rates

(10%)

October

2016

Lower

interest

rates

(4%)

September

2016

Move to

negative

interest

rates

(0%)

--

Move to

negative

interest

rates

(0%)

--

Move to

negative

interest

rates

(0%)

--

Launch

new

quantitati

ve easing

(3%)

April

2016

Launch

new

quantitati

ve easing

(0%)

--

Launch

new

quantitati

ve easing

(2%)

December

2016




3. How many times will the Federal Reserve hike rates this year (2016)?

2.8

2.1

1.9

1.6

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Dec 15 '15 Jan 26 '16 Mar 15 Apr 26

Survey Dates




4. The current presidential campaign is:

5%

56%

39%

2%

61%

37%

0%

10%

20%

30%

40%

50%

60%

70%

Positive for the

economic outlook

Negative for the

economic outlook

Having no effect on

the economic outlook

Mar 15 Apr 26




5. Which would be the best presidential election outcome for the economy?

18%

40%

26%

16%

9%

30%

24%

37%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

A Democrat

wins

A Republican

wins

Doesn't matter Don't

know/unsure

Mar 15 Apr 26




6. Which candidate has best economic policies?

16%

0%

13%

42%

8%

11%

11%

15%

2%

4%

48%

13%

17%

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

Clinton

Sanders

Trump

Kasich

Rubio

Cruz

Don't

know/unsure

Mar 15 Apr 26




Which candidate would be best for the stock market?

22%

0%

14%

35%

11%

0%

19%

13%

0%

4%

50%

11%

22%

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

Clinton

Sanders

Trump

Kasich

Rubio

Cruz

Don't

know/unsure

Mar 15 Apr 26




7. Who is most likely to win this year's presidential election?…

80%

0%

13%

0% 0%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Clinton Sanders Trump Kasich Cruz Don'tknow/unsure




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

2311 2296

2247 2259

2293

2254

2159

2166

2140

2000

2035

2088

2114

2223

2107

2158

2200

2234

1,800

1,850

1,900

1,950

2,000

2,050

2,100

2,150

2,200

2,250

2,300

2,350

Dec16

Jan27 '15

Mar17

April28

Jun16

Jul 28 Sept16

Oct27

Dec15

Jan15 '16

Jan26

Mar15

Apr26

Survey Dates

December 31, 2016 December 31, 2017




9. What do you expect the yield on the 10-year Treasury

note will be on … ?

3.52%

3.04%

3.14%

2.89%

3.24%

3.17%

2.88%

2.67% 2.67%

2.51%

2.34%

2.11%

3.09%

2.88%

2.83%

2.58%

2.0%

2.5%

3.0%

3.5%

4.0%

Dec16

Jan 27'15

Mar17

April28

Jul 16 Jul 28 Sept16

Oct 27 Dec15

Jan 26'16

Mar15

Apr 26

Survey Dates

December 31, 2016 December 31, 2017




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

1.99%

2.13%

2.04%

1.93%

1.75%

1.84%

1.46%

1.56%

1.41%

1.12%

1.17%

0.91% 0.90% 0.85%

0.88%

0.84%

0.78%

1.61%

1.61% 1.62%

1.60%

1.43%

Dec 31, 2018

2.07%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Aug20

Sep16

Oct28

Dec16

Jan27,'15

Mar17

April28

Jun16

Jul28

Aug25

Sept16

Oct27

Dec15

Jan15'16

Jan26

Mar15

Apr26

Dec 31, 2016 Dec 31, 2017 Dec 31, 2018




11. 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%

2.65% 2.58%

2.56%

2.73%

2.65%

2.0%

2.5%

3.0%

3.5%

4.0%

Aug20

Sep16

Oct28

Dec16

Jan27,

'15

Mar17

Apr28

Jun16

Jul28

Aug25

Sept16

Oct27

Dec15

Jan26

'16

Mar15

Apr26

Survey Dates




12. 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

October 27 survey Q3 2018

December 15 survey Q1 2018

Jan. 26, 2016 survey Q2 2018

Mar 15 survey Q3 2018

Apr 26 survey Q4 2018




13. What is the neutral fed funds rate for the economy right now:

0%

5%

10%

15%

20%

25%

Responses

Average: 1.27%




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

Dec 16Jan 27,

'15Mar 17 April 28 Jun 16 Jul 28 Sept 16 Oct 27 Dec 15

Jan 26

'16Mar 15 Apr 26

2016 +2.88% +2.80% +2.84% +2.81% +2.78% +2.70% +2.64% +2.60% +2.45% +2.17% +2.14% +1.95%

2017 +2.43% +2.31% +2.41% +2.21%

+2.88%

+2.80%

+2.84% +2.81%

+2.78%

+2.70%

+2.64%

+2.60%

+2.45%

+2.17%

+2.14%

+1.95%

+2.43%

+2.31%

+2.41%

+2.21%

1.6%

1.8%

2.0%

2.2%

2.4%

2.6%

2.8%

3.0%

2016 2017




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

2.17%

2.07% 2.08%

1.96%

2.17%

2.17%

1.89%

1.75%

1.88%

1.50%

1.72%

1.66%

2.12%

2.07%

2.24%

2.13%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

2.2%

2.4%

Dec

16

Jan

27,'15

Mar

17

April

28

Jun 16 Jul 28 Sept

16

Oct 27 Dec

15

Jan 26

'16

Mar

15

Apr 26

Survey Dates

2016 2017




16. When do you expect the Fed to allow its balance sheet to decline?

Survey Date Average Forecast

April 28, 2014 survey October 2015

June 4 survey March 2016

July 29 survey December 2015

September 16 survey December 2015

October 28 survey January 2016

December 16 survey February 2016

Jan. 27, 2015 survey April 2016

March 17 survey April 2016

April 28 survey May 2016

June 16 survey July 2016

July 28 survey June 2016

August 25 survey September 2016

September 16 survey August 2016

October 27 survey November 2016

December 15 survey December 2016

Jan. 26, 2016 survey February 2017

March 15 survey February 2017

April 26 survey March 2017




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

“Other” responses:

Fear itself

Another collapse in oil price

Debt overhang / deleveraging

Slow demand for labor services (hours growth)

Survey

Date European r

ecessio

n/

financia

l cris

is

Tax/

regula

tory p

olicie

s

Slo

w j

ob g

row

th

Inflation

Deflation

Debt

ceilin

g

Ris

e in inte

rest

rate

s

Geopolitical ris

ks

Glo

bal econ w

eakness

Slo

w w

age g

row

th

Terroris

t att

acks in t

he

U.S

.

Outc

om

e o

f U

S

presid

ential ele

ction

Oth

er

Don't k

now

/

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%

Oct 27 0% 8% 5% 3% 8% 0% 8% 13% 41% 10% 5% 0%

Dec 15 0% 10% 5% 0% 0% 0% 8% 10% 44% 5% 3% 15% 0%

Jan 26 '16 0% 10% 5% 0% 3% 0% 0% 5% 44% 8% 0% 23% 3%

Mar 15 5% 21% 3% 0% 0% 0% 5% 5% 33% 5% 0% 3% 21% 0%

Apr 26 0% 22% 2% 2% 2% 0% 0% 7% 36% 9% 0% 7% 11% 2%




18. 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

Oct27

Dec15

Jan15'16

Jan26

Mar15

Apr26

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 22.1 22.9 28.8 24.1 24.4 21.1

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%

22.1%

22.9%

28.8%

24.1%

24.4%

21.1%

10%

15%

20%

25%

30%

35%

40%

Survey Dates




19. Please rate the members of the Federal Open Market Committee on a scale of 0 to 10, with 0 being the most dovish and 10 being the most hawkish.

2.33

3.69

2.91

3.26

3.18

3.76

4.47

5.09

6.53

6.28

7.47

2.76

3.03

3.11

3.20

3.46

3.73

4.81

4.97

5.30

5.53

5.64

5.88

6.71

7.68

0 1 2 3 4 5 6 7 8 9 10

Charles L. Evans, Chicago

Janet L. Yellen, Board of Governors, Chair

Lael Brainard, Board of Governors

William C. Dudley, NY, Vice Chairman

Eric Rosengren, Boston

Daniel K. Tarullo, Board of Governors

Jerome H. Powell, Board of Governors

Neel Kashkari, Minneapolis

Robert S. Kaplan, Dallas

Stanley Fischer, Board of Governors

Patrick Harker, Philadelphia

James Bullard, St. Louis

Loretta J. Mester, Cleveland

Esther L. George, Kansas City

Dec 15 Apr 26




20. Thinking about the best way to make the US globally competitive and also the needs for government revenue, where should the US set its top corporate tax rate?

0%

5%

10%

15%

20%

25%

30%

35%

Responses sorted by size

Average: 22.38%




21. Which statement best reflects your views on corporate tax inversions?

71%

22%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Companies should

take whatever legalactions they can to

maximize their profits

Companies headquartered in a

nation have an obligation to pay the

nation’s tax rate

Don't know/unsure




22. Which statement best describes your view on recent actions taken by the US Treasury to stem inversions?

67%

27%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Treasury changed the rules in the middle of

the game and that’s bad for business and

the economy

Treasury did what

was needed to protectthe US tax base

Don't know/unsure




23. Recently the US GDP has been weak, but job growth has been strong. Which measure, jobs or GDP, gives the best indication of the strength and direction the US economy?

Other responses:

PMIs (Mfg production, non-mfg business activity)

Can't be separated

Percent of working age population employed

Corporate profits

49%

38%

9%

4%

0%

10%

20%

30%

40%

50%

60%

Jobs GDP Other Don't

know/unsure




24. What is your primary area of interest?

Comments: Jim Bianco, Bianco Research: Biggest wildcard is oil. A fall back to $26 would trigger concerns about a "credit event" for banks and

lenders to the energy sector. Robert Brusca, Fact and Opinion Economics: I cannot understand why this Fed is so labor market centric in its analysis. I

get that it follows the unemployment rate as part of its dual mandate. But the rhetoric linking inflation to the US rate of unemployment (which is rising now) is peculiar … Not all inflation is cost-push. This tack encourages people to emphasize labor market

data more at a time that these data are being distorted by demographics and hard economic times ( foreign competition and technology-substitution). The failure of the Phillips Curve (genuflect!) to work should shift the Fed away from this analysis instead of

'doubling up in the hole' (i.e. belief in mean reversion). Moreover, look at the current low in claims --- plot the chart of claims levels VS

Economics 51%

Equities 20%

Fixed Income

11%

Currencies 0%

Other 18%




the recession bands. YIKES!!! NOTE how few times recession occurs longer than ONE YEAR after clams hit a cycle low. Last week's claims low was the lowest since 1973. It should make everybody nervous instead of joyful about expansion prospects. Have people forgotten

all lessons from history??? Oh, the Fed is labor centric? Never mind. Thomas Costerg, Standard Chartered Bank: Chair Yellen is dovish and she continues to punch above her weight on the FOMC;

we also think she may be influenced by Governor Lael Brainard, who is very sensitive about the US dollar. As a result, we do not think the Fed will hike rates again. We think the December rate hike was "one and done." We worry that US growth will slow further in the second

half of the year, pulled down by slowing car sales and construction. John Donaldson, Haverford Trust Co.: The FOMC remains clear on the message that they will be patient and far more willing to err

on the side of being too slow and needing to catch up rather than moving too quickly and needing to reverse course. Neil Dutta, Renaissance Macro Research: The Fed is pursuing a

policy of benign neglect with respect to inflation. Despite the firming of prices in Q1, the recent drop in the broad dollar index, and increase in commodity prices, the Fed sees somewhat lower core

inflation next year than previously. The Fed's willingness to ignore the recent inflation pick-up suggests an increased willingness to overshoot its inflation target. That is ultimately positive for risk assets.

Robert Fry, Robert Fry Economics: Martin Feldstein taught me in graduate school that the impact of interest rates on saving is ambiguous. Low interest rates can force people to save MORE (and

consume less) to fund their retirements. I think that's happening now. Rates are so low that they are reducing consumer spending, especially among the elderly who put their savings in bank accounts rather than stocks and bonds.




Dennis Gartman, The Gartman Letter: If I have a concern it is that the adjusted monetary base has been moving quietly, but disconcertingly downward; but worse, the portion of the base that is comprised of the cash component of M1 is rising and cash, as we

know, or should know, is by definition deflationary for it is lost entirely to the reserve banking system. This I find dismaying. Art Hogan, Wunderlich Securities: The economy is doing better

than we get to hear about in the election cycle. The sky is falling rhetoric will cease as soon as the election cycle is over. Constance Hunter, KPMG LLP: The US economy is lackluster as is

corporate investment. This means more ho-hum growth in the U.S. driven by consumption and housing investment. It’s a 2.0% world; we all need to consider Bullard's exercise of questioning if negative and low rates have a perverse effect on inflation and in turn growth.

Jack Kleinhenz, NRF Chief Economist: Because of the softer than expected consumer spending and weak industrial activity the Fed will leave its benchmark unchanged in April. Expect a rate hike in June if

growth accelerates and inflation stays on upward track David Kotok, Cumberland Advisors: Treasury changed rules in

the middle of the checker game. Why should any global company HQ in the US after that? Treasury lost trust with the "inversion affair."

Guy LeBas, Janney Montgomery Scott: The FOMC's job for April is to talk up the possibility, not the probability, of future rate hikes without causing the dollar to rise too quickly. I don't envy them.




Donald Luskin, Trend Macrolytics: The uncertainties of the coming election are a negative, because markets hate uncertainty. That said, the process is showing unexpected innovation and elasticity which is a real positive long term. Political ideas are coming

in from outside the establishment, and that's healthy. Besides, how long has it been since a politician has said "Let's make America great again?" Oh, wait, I remember. It was when Deng Xiao Peng said, "To get rich is glorious." See? Socialist countries CAN embrace

capitalism. Even here. Rob Morgan, Sethi Financial Group: Last Wednesday, April 20th, Donald Trump said he'd be inclined to replace Janet Yellen as Fed

Chair. He also said he'd support the notion of Congress auditing the Fed's decision-making. Dangerous. Chad Morganlander, Stifel Nicolaus (Washington Crossing

Advisors): We believe tight financial conditions, slow global growth and the strong dollar will continue to influence Fed policy. We expect a slower move to normalization than consensus.

Joel Naroff, Naroff Economic Advisors: The biggest issue facing businesses is how long they can contain wage pressures and what happens once the dam breaks. Too many don't have contingency

plans. James Paulsen, Wells Capital Management: With economic surprise indexes rising recently around the globe (particularly in

China) and with the US dollar weakening while commodity prices recover, the Fed's decision to continue to pause rate hikes seems increasingly indefensible.




Lynn Reaser, Point Loma Nazarene University: A weaker dollar, higher oil prices, and improved investor confidence have significantly tempered the headwinds facing the U.S. April might be a window of relative calm that the Fed could have raised rates if it had not

already preset expectations. John Roberts, Hilliard Lyons: While we generally suggest that investors ignore political considerations when making investments,

as we look at the long-term, the current tenor of the presidential campaign and many of the policies being floated by the candidates can in no way be considered positive for the equity markets.

Chris Rupkey, Bank of Tokyo-Mitsubishi: Economy shows signs of its age as the expansion starts year 8 in July. No special headwinds this late after the "Great Recession." The worry here is too many sectors are having problems (maybe) and could drag us

down near recession, thinking oil & gas, strike one, autos, strike 2, computers/iPhone, strike 3, banks/finance, strike 4, exporters, strike 5. Many sectors of the economy have already maxed out for this expansion, had their best day. A lot of the areas of the economy

won't be getting any better. John Ryding, RDQ Economics: The FOMC's excuses to continue to

delay on normalization are running thin. Risk assets have rebounded and the decline never was much of a threat to the economy. Global growth is sluggish but not a threat to the expansion. The Fed is undermining confidence by suggesting the risks are such that it is

delaying renormalization. Allen Sinai, Decision Economics: The Fed should be cautious until the 2% price stability target clearly is in sight.




Hank Smith, Haverford Investments: The only thing good about the 2% expansion is there isn't enough growth to create excesses that would normally lead to the next recession. This could be a very long expansion. Also, low growth is helping to keep rates low which

is good for the budget. Richard Steinberg, Steinberg Global Asset Management: Gridlock in Washington would be good for the market but bad for the

country. Mostly likely outcome in the election is a split of power. Diane Swonk, Diane Swonk & Associates: Markets seem to be turning a blind eye to the real rise in political and policy risks

emerging both at home and abroad. They seem to be putting their heads in the sand, ignoring the fact that they are more exposed, with their rears in the air, than ever when they do that.

Mark Vitner, Wells Fargo: The employment and GDP data are more consistent than widely thought. Seasonal factors boosted first quarter job growth but did not impact GDP. The quality of jobs has also been more heavily weighted toward lower value added

positions.




Scott Wren, Wells Fargo Investment Institute: We are looking for an improving economy and earnings as we move through the balance of the year and in 2017. In our opinion, the market is already looking at 2017, and that is why the S&P 500 is near the all-

time record high. Lousy first quarter earnings have been absolutely expected by market participants for literally months. The poor results are in no way, shape or form a surprise. This cyclical bull market has more room to run in our opinion. Focus on the cyclical

sectors looking ahead like Technology, Consumer Discretionary and Industrials. The pattern of cyclical domination in terms of performance since the mid-February S&P 500 low should continue over the balance of this year as the labor market continues to slowly

improve and confidence works its way higher over time. Pullbacks in equities need to be bought. Mark Zandi, Moody's Analytics: The U.S. economy is fast

approaching full-employment and targeted inflation. Any risks to the economic outlook are fading. The Fed must soon resume normalizing monetary policy or risk an over-heating economy.

CNBC Fed Survey, April 26, 2016

Documents

Transcript of CNBC Fed Survey, April 26, 2016