cnbc fed survey, june 14, 2016
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FED SURVEYJune 14, 2016
These survey results represent the opinions of 41 of the nations top money managers,
investment strategists, and professional economists.
They responded to CNBCs invitation to participate in our online survey. Their responses werecollected on June 9-11, 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 thosewho did accept our invitation.
1.
At its June 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
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FED SURVEYJune 14, 2016
(For those answering rates would be kept unchanged at theJune meeting) What is the main reason the Fed will keep
rates unchanged at its June meeting?
Other:
Because they will be downgrading
their GDP projections at this meeting
They were never going to anyway
Uncertain about economy's strength
Weak April and May jobs
Were prepping the market for a July
hike prior to the May employment
report
Yellen foot-dragging
50%
13%
15%
5%
18%
0%
0% 10% 20% 30% 40% 50% 60%
Weak May jobs
report
Uncertainty
surroundingBrexit vote
Global growthconcerns
Marketsunprepared for
rate hike
Other
Don't
know/unsure
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FED SURVEYJune 14, 2016
After this monthsmeeting, the Federal Reserve's nextmove will most likely be:
88%
10%
0%
3%
90%
10%
0%
0%
94%
4%
0%
2%
95%
3%
0%
3%
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 Jun 14
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FED SURVEYJune 14, 2016
When will the Federal Reserve make its next move?
Jan 27 Survey March 15 Survey April 26 Survey June 14 Survey
For
those
who
said:
Average
month:
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
Raise
interest
rates
(95%)
Sept
2016
Lower
interest
rates
(10%)
August
2016
Lower
interest
rates
(10%)
October
2016
Lower
interest
rates
(4%)
Sept
2016
Lower
interest
rates
(3%)
October
2016
Move to
negative
interest
rates
(0%)
--
Move to
negative
interest
rates
(0%)
--
Move to
negative
interest
rates
(0%)
--
Move to
negative
interest
rates
(0%)
--
Launch
newquant.
easing
(3%)
April
2016
Launch
newquant.
easing
(0%)
--
Launch
newquant.
easing
(2%)
Dec
2016
Launch
newquant.
easing
(3%)
March
2017
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FED SURVEYJune 14, 2016
2.How many times will the Federal Reserve hike rates thisyear (2016)?
2.8
2.1
1.9
1.6 1.5
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 Jun 14
Survey Dates
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FED SURVEYJune 14, 2016
3.The current presidential campaign is:
5%
56%
39%
2%
61%
37%
3%
58%
40%
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 Jun 14
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FED SURVEYJune 14, 2016
4.Which would be the best presidential election outcomefor the economy?
18%
9%
23%
40%
30%
35%
26%
24%
28%
16%
37%
15%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Mar 15 Apr 26 Jun 14
A Democrat wins A Republican wins
Doesn't matter Don't know/unsure
Republican Wins
Doesn't matter
Democrat wins
Don't know/unsure
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FED SURVEYJune 14, 2016
5.Which candidate has best economic policies?
30%
45%
25%
0%
10%
20%
30%
40%
50%
60%
Clinton Trump Don't know/unsure
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FED SURVEYJune 14, 2016
Which candidate would be best for the stock market?
38%
25%
38%
0%
10%
20%
30%
40%
50%
60%
Clinton Trump Don't know/unsure
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FED SURVEYJune 14, 2016
6.Who is most likely to win this year's presidentialelection?
80%
13%
7%
80%
15%
5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Clinton Trump Don't know/unsure
Apr 26 Jun 14
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FED SURVEYJune 14, 2016
In the wake of the November presidential election,protectionist trade policies ...
13%
53%
33%
0%
3%
0% 10% 20% 30% 40% 50% 60%
Will be
enactedregardless of
who wins
Won't be
enactedregardless of
who wins
Will be
enacted onlyif Donald
Trump wins
Will be
enacted onlyif Hillary
Clinton wins
Don't
know/unsure
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FED SURVEYJune 14, 2016
7.Where do you expect the S&P 500 stock index will be on ?
23112296
22472259
2293
2254
2159
2166
2140
2000
2035
2088
2114
2149
2223
2107
2158
2200
22342244
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
Jul28
Sept16
Oct27
Dec15
Jan15
'16
Jan26
Mar15
Apr26
Jun14
Survey Dates
December 31, 2016 December 31, 2017
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FED SURVEYJune 14, 2016
8.
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% 2.10%
3.09%
2.88%
2.83%
2.58%2.54%
2.0%
2.5%
3.0%
3.5%
4.0%
Dec16
Jan27
'15
Mar17
April28
Jul 16Jul 28 Sept16
Oct27
Dec15
Jan26
'16
Mar15
Apr26
Jun14
Survey Dates
December 31, 2016 December 31, 2017
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FED SURVEYJune 14, 2016
9.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%
0.74%
1.61%1.61%1.62%
1.60%
1.43%
1.49%
2.07%
2.17%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Dec 31, 2016 Dec 31, 2017 Dec 31, 2018
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FED SURVEYJune 14, 2016
10. At what fed funds level will the Federal Reserve stophiking 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%
2.64%
2.0%
2.5%
3.0%
3.5%
4.0%
Survey Dates
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FED SURVEYJune 14, 2016
11. When do you believe fed funds will reach itsterminal 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
Jun 14 survey Q4 2018
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FED SURVEYJune 14, 2016
12. What is your forecast for the year-over-yearpercentage 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 26'16
Mar 15 Apr 26 Jun 14
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% +2.05%
2017 +2.43% +2.31% +2.41% +2.21% +2.25%
+2.88%
+2.80%
+2.84%+2.81%
+2.78%
+2.70%
+2.64%
+2.60%
+2.45%
+2.17%
+2.14%
+1.95%
+2.05%
+2.43%
+2.31%
+2.41%
+2.21%
+2.25%
1.6%
1.8%
2.0%
2.2%
2.4%
2.6%
2.8%
3.0%
2016 2017
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FED SURVEYJune 14, 2016
13. What is your forecast for the year-over-yearpercentage 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%
1.75%
2.12%
2.07%
2.24%
2.13%
2.20%
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
Jun
14
Survey Dates
2016 2017
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FED SURVEYJune 14, 2016
14. When do you expect the Fed to allow its balancesheet to decline?
0%
0%
0%
3%
0%
0%
5%
10%
0%
8%
3%
5%
63%
5%
0% 10% 20% 30% 40% 50% 60% 70%
Jun '16
Jul '16
Aug '16
Sep '16
Oct '16
Nov '16
Dec '16
Jan '17
Feb '17
Mar '17
Apr '17
May '17
After May '17
Never
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FED SURVEYJune 14, 2016
15. What is the single biggest threat facing the U.S.economic recovery?
Other responses: Fear itself
Inadequate monetary stimulus as
reflected in weak nominal GDP
growth
Squeezed profit margins
Slow global growth due to slower
productivity/lab force growth
Survey
Date Europeanrecession/
financialcrisis
Tax/
regulatorypolicies
Slow
jobgrowth
Inflation
Deflation
Debtceiling
Riseininterestrates
Geopoliticalrisks
Globaleconweakness
Slow
wagegrowth
Terroristattacksinthe
U.S.
OutcomeofUS
presidentialelection
Protectionisttrade
policies
Other
Don'tknow/
n s e
Apr 30 20% 31% 20% 0% 2% 2% 11%
Jun 18 15% 28% 20% 3% 3% 0% 13%
Jul 30 8% 30% 22% 0% 2% 2% 10% 14% Sep 17 4% 27% 22% 2% 0% 4% 18% 7%
Oct 29 8% 29% 24% 3% 3% 3% 8% 13%
Dec 17 5% 32% 29% 2% 0% 2% 15% 2%
Jan 28 '14 7% 21% 30% 2% 0% 0% 12% 21%
Mar 18 10% 23% 26% 3% 5% 0% 5% 18%
Apr 28 3% 26% 21% 3% 5% 0% 8% 18% 13%
Jul 29 12% 29% 12% 6% 3% 0% 12% 12% 12%
Sep 16 6% 26% 29% 6% 3% 0% 6% 11% 11%
Oct 28 31% 18% 15% 3% 3% 0% 10% 8% 8%
Dec 16 40% 14% 14% 3% 6% 0% 3% 14% 3%
Jan 27 '15 0% 13% 9% 0% 0% 0% 6% 16% 41% 6% 16%
Mar 17 6% 14% 0% 3% 6% 0% 6% 8% 28% 17% 14% 0April 28 3% 11% 8% 3% 0% 0% 6% 11% 28% 8% 19%
Jun 16 3% 17% 3% 0% 0% 0% 14% 25% 22% 6% 11%
Jul 28 6% 21% 9% 0% 0% 0% 12% 6% 29% 9% 9%
Sept 16 0% 16% 2% 0% 4% 0% 0% 8% 45% 8% 14%
Oct 27 0% 8% 5% 3% 8% 0% 8% 13% 41% 10% 5%
Dec 15 0% 10% 5% 0% 0% 0% 8% 10% 44% 5% 3% 15%
Jan 26 '16 0% 10% 5% 0% 3% 0% 0% 5% 44% 8% 0% 23%
Mar 15 5% 21% 3% 0% 0% 0% 5% 5% 33% 5% 0% 3% 21%
Apr 26 0% 22% 2% 2% 2% 0% 0% 7% 36% 9% 0% 7% 11%
Jun 14 0% 28% 5% 3% 0% 0% 25% 0% 28% 8% 0% 5% 13% 10%
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FED SURVEYJune 14, 2016
16. In the next 12 months, what percent probability doyou place on the U.S. entering recession? (0%=No
chance of recession, 100%=Certainty of recession)
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%
23.5
10%
15%
20%
25%
30%
35%
40%
Aug11,'1
1
Sep1
9
Oct3
1
Jan23,'1
2
Mar1
6
Apr2
4
Jul3
1
Sep1
2
Dec1
1
Jan29,'1
3
Mar1
9
Apr3
0
Jun1
8
Jul3
0
Sep
6
Oct2
9
Dec1
7
Jan28'1
4
Mar1
8
Apr2
8
Jul2
9
Sep1
6
Oct2
8
Dec1
6
Jan27'1
5
Mar1
7
April2
8
Jun1
6
Jul2
8
Sept1
6
Oct2
7
Dec1
5
Jan15'1
6
Jan2
6
Mar1
5
Apr2
6
Jun1
4
Survey Dates
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FED SURVEYJune 14, 2016
17. Which of the following is the best explanation of theweak May jobs report?
55%
35%
10%
0%
10%
20%
30%
40%
50%
60%
Statistical blip not
reflective of the trend
Beginning of a trend
of lower job growth
Don't know/unsure
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FED SURVEYJune 14, 2016
18. Which of the following factors do you believe isdepressing job growth now? (Select all that apply)
Other:
Affordable Care Act
Higher wages are making employers
more selective
Lagged effects of Fed's 2014-15
threat to raise interest rates Skills mismatch
We have just been through a mini-
recession
Current/anticipated aggregate
demand does not support adding
meaningful numbers of new
employees and hiking wages. Labor
market is not tight.
Lack of warm qualified bodies
Lower commodity prices
Rise of automation destroying manyjobs
Skills mismatch as well as normal
slowdown after rapid growth past 6
years
Weak foreign growth
58%
40%
28%
28%
15%
13%
0%
0% 10% 20% 30% 40% 50% 60% 70%
Employers uncertain about future
growth
Economy at full employment
Higher minimum wages
Other
Productivity beginning to rise
Election uncertainty
Don't know/unsure
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FED SURVEYJune 14, 2016
19. 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?
Jul 29
14 Aug 20 Sep 16 Oct 28 Dec 16
Jan 27
'15
Mar
17 Apr 28 Jun 16 Jul 28
Jun 14
'16
Considerably more slack now 48% 34% 20% 18% 16% 16% 13% 6% 5% 12% 10%
Modestly more slack now 36% 40% 60% 69% 55% 50% 63% 64% 54% 47% 43%
No difference 4% 6% 3% 0% 0% 6% 11% 0% 15% 9% 15%
Modestly less slack now 8% 11% 6% 5% 24% 19% 11% 22% 15% 24% 23%
Considerably less slack now 4% 9% 9% 8% 5% 9% 3% 8% 10% 9% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Modestly less slack
Modestly more slack
Considerably less slack
No difference
Considerably more slack
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FED SURVEYJune 14, 2016
Relative to an economy operating at full capacity, what bestdescribes your view of the amount of resource slack in the
U.S. right now for production capacity?
Jul 29
'14 Aug 20 Sep 16 Oct 28 Dec 16
Jan 27
'15
Mar
17 Apr 28 Jun 16 Jul 28
Jun 14
'16
Considerably more slack now 12% 9% 8% 8% 8% 0% 14% 8% 10% 21% 20%Modestly more slack now 56% 60% 64% 64% 55% 59% 57% 57% 62% 38% 55%
No difference 8% 14% 8% 15% 13% 19% 14% 5% 8% 15% 10%
Modestly less slack now 16% 9% 14% 8% 24% 13% 11% 19% 13% 21% 13%
Considerably less slack now 4% 9% 3% 5% 0% 9% 5% 11% 8% 6% 3%
0%
10%
20%
30%
40%
50%
60%
70%
No difference
Modestly more slack
Modestly less slack
Considerably less slack
Considerably more slack
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FED SURVEYJune 14, 2016
20. When it comes to the effect on policy for each of thefollowing factors, do you believe the Federal Reserve
pays too much attention, pays the right amount ofattention, or doesn't pay enough attention?
50%
40%
70%
45%
50%
23%
5%10% 8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Latest high-frequency
data, such as the mostrecent jobs or
inflation report
Intl economic and
financialdevelopments
Market reactions to
monetary policy
Pays too much attention Pays the right amount of attention Doesn't pay enough attention
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FED SURVEYJune 14, 2016
21. When it comes to comparing the effect on policybetween now and 10 years ago for each of the following
factors, do you believe the Federal Reserve pays moreattention now, the same amount of attention, or lessattention now?
53%
75% 78%
43%
25% 20%
5% 3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Latest high-frequencydata, such as the most
recent jobs orinflation report
Intl economic andfinancial
developments
Market reactions tomonetary policy
Pays more attention now Pays the same amount of attention now Pass less attention now
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FED SURVEYJune 14, 2016
22. What is your primary area of interest?
Comments:
Marshall Acuff, Silvercrest Asset Management: The Fed should
be economic data driven and let the markets respond accordingly.Furthermore there continues to be too many Fed governors voicinganticipatory opinions about future Fed actions before all theeconomic data is reported in front of a pending Fed meeting.Continuing such conduct could eventually jeopardize the credibility ofthe Fed.
Jim Bianco, Bianco Research: Biggest Issue of the year is BRexit.While I do not expect "leave" (the EU) to happen, if leave does
prevail, it is a game changer. It would mark the beginning of theend of the EU/Euro and a dangerous rise in protectionist policies.
Economics
51%
Equities20%
FixedIncome
10%
Currencies0%
Other20%
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FED SURVEYJune 14, 2016
Peter Boockvar, The Lindsey Group: The Fed has so bungledtheir exit from this extraordinary experiment that they better hope
the recent rise in commodity prices is just a blip because if it's forreal at the same time services inflation stays high, they are in deeps**t.
Robert Brusca, Fact and Opinion Economics: The Fedsproblemis it tracks the economy using the WRONG paradigm. It is as thoughthe US economy has been TRANSFORMED into a SMALL OPENeconomy and is a price taker in world markets rather than a largesomewhat Open economy as in the past. This means that the US
does not set global wages and prices, let alone its own. They are setin foreign markets. That makes US macro statistics less important toactual US economic outcomes and the value of the dollar muchMORE important. The Fed's usage or framing of policy as focused onlabor and wages in a highly Keynesian framework is quaint. The Fedneeds to THINK MORE about why certain policies do not work andwhy the Phillips curve seems to have evaporated instead of makingpolicy like everything is still the same. It isn't. International marketsand events are much more important than the Fed seems to
recognize or to admit.
John Donaldson, Haverford Trust Co.: When you look at thedetail in the jobs report, the weakness is concentrated in oil & gas,mining, and the support activities for those industries. That supportcategory has been particularly weak in spring months where thehistorical data has shown seasonal strength.
Neil Dutta, Renaissance Macro Research: The upcoming British
referendum was a strong enough reason to delay a hike in June. Thelatest payroll figures lower the sense of urgency to hike in July. Thatsaid, the rationale for gradual rate hikes remains strong and oursense is the market has a tough time between the notions of slowhikes versus no hikes. Wage growth has picked up and thestabilization in the USD has helped the outlook for core inflation.
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Mike Englund, Action Economics: The May payroll undershootpartly reflected a Verizon and weather hit that will be reversed in
June, hence setting up the fed for a July rate hike. Yet, it'sunfortunate that the Fed has talked itself into a spot where it needsto fit policy changes around data wiggles.
Robert Fry, Robert Fry Economics: The Fed should stop puttingso much weight on a single measure, the increase in nonfarmpayrolls. If you look at a broader sample of data (April personalconsumption expenditures and new home sales, house prices,various measures of labor costs, unemployment claims), it's hard to
justify not raising the federal funds rate.
Kevin Giddis, Raymond James Financial: The Fed remains in adifficult position. U.S. economic growth and inflation is moderatingenough to consider raising rates, but not enough to garner enoughsupport within its ranks or convince the market that doing so isprudent. Unfortunately, waiting is taking a toll on their creditability.
Art Hogan, Wunderlich Securities: It is very telling that the
market has been able to both accept the fact that the Fed will raiserates this year and that economic data is mixed at best. We are in afar better place today than we were this time last year.
John Kattar, Ardent Asset Advisors: There is absolutely noreason for the Fed to do anything prior to the election. Economicdata is tepid, inflation is subdued, and geopolitical risks such asBrexit loom.
Jack Kleinhenz, NRF Chief Economist: The pace of a Fed policychange and inflation are uncertain. Recent economic data has ingeneral been positive but solid economic data is required for a Fedhike in July. The weak May employment report and Brexit are issuesaffecting the near-term decision and later this year the presidentialelection will influence a late 2016 decision.
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Subodh Kumar, Subodh Kumar & Associates: For endeavors,checks and balances work best to curb excess, including in capital
markets in the past in their relationship with central banks. Beingoverly enmeshed into following central banks can be seen again inthe capital market reactions to recent musing by the Federal ReserveChairman that interest rate increases need to take into account theeconomy. Currently, with apparently close to $10 trillion dollars ofsubzero sovereign debt having been issued worldwide and corporateshare buybacks in the United States at least running at record levelsfor several quarters, of concern to investors should be that suchcoopting builds in risks that appear not clearly understood. Assuming
steady state low risk seems to be a less preferable option forportfolios to diversifying across asset classes including cash andprecious metals as well as focusing on quality.
Guy LeBas, Janney Montgomery Scott: While a June rate hikewasn't a given, the May jobs report essentially took the option offthe table. While the number was a surprise, the reaction shouldn'tbe. The dollar has stopped rising and the stress fractures in China'scurrency peg have dissipated, which, ironically, gives FOMC
policymakers a little more room to hike exactly when the domesticeconomic data is warning that they perhaps shouldn't.
Donald Luskin, Trend Macrolytics: The Fed is so out of control itis destroying business confidence. They say they are "datadependent" but they come off like data junkies who flip-flop everytime some news release comes out. It's embarrassing.
Thom Melcher, PNC Asset Management Group: US economic
conditions are stable and modestly improving. Valuations are fairgiven the pace of growth. The Fed's next move will be to tighten,but they are not in a rush to do so.
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Rob Morgan, Sethi Financial Group: The weak May jobs reporttakes a Fed hike off the table for the near term, and given the Fed's
propensity to leave rates unchanged near a presidential election, wewon't see a hike until December at the earliest.
Joel Naroff, Naroff Economic Advisors: The Fed needs to stoppaying so close attention to current data and might even stopindicating that they are data driven, as it too often refers to currentdata.
James Paulsen, Wells Capital Management: Currently, yield
structures that are nearing zero or below about the world arebecoming the biggest fear generator for private economic playersand investors. Perhaps more than ever, the Fed could have morepositive influence on private sector players' confidence by showingsome real world economic leadership and following through with arate increase in July.
Lynn Reaser, Point Loma Nazarene University: "Datadependent" policy can only work if current data is a good predictor of
the future. Unfortunately, it is not. The economy's performance insix months may look nothing like today's data, which means thatmonetary policy, which acts with a lag, may be significantly offcourse.
John Roberts, Hilliard Lyons: Continued high levels of negativecampaigning between the two major party candidates are unlikely tobe positive for the markets. Hopefully we will get some morepositive rhetoric and specific policy proposals from the minor party
candidates!
Merrill Ross, Wunderlich: We still have to consider that sluggishgrowth and the potential for deflation could be symptomatic ofsecular and demographic changes that are very difficult to overcome,and far beyond the influence of monetary policy.
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Chris Rupkey, Bank of Tokyo-Mitsubishi: Fed reluctance to liftrates back to normal is making companies, individuals and investors
and traders believe falsely that they cannot raise interest rates or itwill "break" the economy. The Fed's zero rate policy has cost saversbillions in lost real wealth. Bring back Greenspan, not sure why wethrew his measured pace rates normalization under the bus. Yellenvoted for his rate hikes, now she won't.
John Ryding, RDQ Economics: The Fed has consistentlyoverreacted to the latest payroll print (e.g. September 2013 andSeptember 2015). In addition, the Fed has paid too much attention
to short-term market volatility. Communication is unclear (datadependent but which data?) The Fed needs to rethink and clarify thebasis for policy decisions. Right now policy moves are very much inthe discretionary mode of operation.
Allen Sinai, Decision Economics: The U.S. economy is in a newphase of the business cycle: tight labor markets and the beginning ofwage-price pickup.
Hank Smith, Haverford Investments: The next president willhave an easy opportunity to accelerate GDP growth throughcorporate tax reform (where there is bipartisan support) andregulatory reform. Letshope they see the light!
Diane Swonk, Diane Swonk & Associates: The push to inhibittrade, close boarders, and up regulation across a board swath ofindustries are all a threat to growth in 2017. The only policy offset isthe realization by both sides of the aisle that corporate tax reform
could bring money home and increase our competitive advantage.The Fed is pretty much out of ways to stimulate short of a helicopterdrop, which could be its last move as an independent central bank ifit were to occur.
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Peter Tanous, Lynx Investment Advisory: Biggest concern is therising number of jobs disappearing due to automation. The case for a
guaranteed income is getting more interesting.
Mark Vitner, Wells Fargo: Financial market volatility will increaseahead of ANY meeting that the markets sense that the Fed is set toraise interest rates. The Fed needs to reset their expectations inregards to this.
Scott Wren, Wells Fargo Investment Institute: Investors arealready looking ahead to improved economic and earnings growth in
the second half of this year and in 2017. That is why we are only awhisper away from the all-time record high in the S&P 500. Whenthe current consolidation phase ends for the SPX we look for theindex to move higher and set new record highs in the second half ofthe year. It might not break through the May '15 intraday recordhigh the first 2 or 3 times it tries but we are convinced it will. Wewant our clients to stay invested and use downside volatility as abuying opportunity. Good, not great, equity returns over the next12-18 months.
Clare Zempel, Zempel Strategic: The failure of central banksworldwide to spur faster nominal growth, which reflects anunimaginative and misdirected focus on low interest rates, hastragically suppressed growth in incomes and fomented a xenophobicpolitical shift.
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