cnbc fed survey, march 17, 2015

CNBC Fed Survey March 17, 2015 Page 1 of 30

FED SURVEY March 17, 2015

These survey results represent the opinions of 38 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 collected on March 12-13, 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. For U.S. economic growth and corporate earnings, the strength of the dollar is:

13%

76%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Positive Negative Don't know/unsure



2. What effect does strength of the dollar have on your GDP growth/core inflation forecast for 2015?

-0.22 -0.22

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

0.20

0.40

0.60

0.80

1.00

GDP Inflation

Pct

. po

ints



3. As a result of the strength of the U.S. dollar, Fed policy will be:

32%

61%

5%

3%

0%

10%

20%

30%

40%

50%

60%

70%

Easier thanoriginallyforecast

The same asoriginallyforecast

Tighter thanoriginallyforecast

Could go eitherway

Don'tknow/unsure



4. The Fed will remove the phrase patient from its monetary

policy statement in ...

0%

0%

33%

27%

21%

0%

0%

3%

3%

69%

14%

11%

3%

3%

0%

0%

0%

0%

0%

0%

0%

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

January

February

March

April

June

July

August

September

October

November

December

2016 or later

Won't remove

Don't

know/unsure

Jan 27 Mar 17



5. 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%

34%

20% 18%

16% 16% 13%

36%

40%

60%

69%

55%

50%

63%

4% 6%

3%

0% 0%

6%

11% 8%

11%

6%

5%

24%

19%

4%

9% 9% 8%

5%

9%

3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

July 29 August 20 Sep 16 Oct 28 Dec 16 Jan 27 Mar 17

Considerably more slack now Modestly more slack now

No difference Modestly less slack now

Considerably less slack now

Modestly less slack

Modestly more slack

Considerably less slack

No difference

Considerably more slack



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?

8%

14%

56%

60%

64% 64%

55%

59%

57%

13%

19%

24%

13%

11% 9%

5%

0%

10%

20%

30%

40%

50%

60%

70%

July 29 August 20 Sep 16 Oct 28 Dec 16 Jan 27 Mar 17

Considerably more slack now Modestly more slack now

No difference Modestly less slack now

Considerably less slack now

No difference

Modestly more slack

Modestly less slack

Considerably less slack

Considerably more slack



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

2017 2029

2053

2109

2066

2093

2122

2058

2075

2149

2111

2194

2187

2128

2250 2248

2199

2311 2296

2247

1,800

1,900

2,000

2,100

2,200

2,300

2,400

Apr 28 Jun 4 July 29 Sep 16 Oct 28 Dec 16 Jan 27 Mar 17

Survey Dates

June 30, 2015 December 31, 2015

June 30, 2016 December 31, 2016



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

3.54%

3.24%

3.15% 3.16%

2.90%

2.63%

2.14%

2.28%

3.43% 3.45%

3.19%

2.96%

2.54% 2.57%

3.30%

2.80%

2.89%

3.52%

3.04%

3.14%

2.0%

2.5%

3.0%

3.5%

4.0%

Apr 28 Jun 4 Jul 29 Sep 16 Oct 28 Dec 16 Jan 27 Mar 17

Survey Dates

June 30, 2015 December 31, 2015

June 30, 2016 December 31, 2016



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

Jan 28,'14

Mar 18 Apr 28 Jun 4 Jul 29 Sep 16 Oct 28 Dec 16Jan 27,

'15Mar 17

2015 +2.90% +3.02% +3.00% +2.81% +2.75% +2.90% +2.90% +3.02% +2.99% +2.69%

2016 +2.88% +2.80% +2.84%

+2.90%

+3.02% +3.00%

+2.81%

+2.75%

+2.90% +2.90%

+3.02%

+2.99%

+2.69%

+2.88%

+2.80%

+2.84%

2.5%

2.7%

2.9%

3.1%

3.3%

3.5%

2015 2016



9. 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%

2.17%

2.07% 2.08%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

2.2%

2.4%

Jun 4 Jul 29 Sep 16 Oct 28 Dec 16 Jan 27, '15 Mar 17

Survey Dates

2015 2016



10. When do you expect the Fed to first increase the fed funds rate and when will it 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



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

28%

49%

46%

49%

44%

39%

50%

54%

43%

43%

49%

43%

49% 50%

47%

32%

17%

6%

3% 3% 3%

6% 5%

13%

3%

3%

6% 5% 6%

3%

8%

0%

10%

20%

30%

40%

50%

60%

Jul 31,'12

Jul 29,'14

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

Mar 17

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

Too accomodative

Don't know/unsure

Too restrictive

Just right



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

Jul

30

Sep

17

Oct

29

Dec

17

Jan

28'14

Mar

18

Apr

28Jun 4

Jul

29

Aug

20

Sep

16

Oct

28

Dec

16

Jan

27,'15

Mar

17

Jun 30, 2015 0.50% 0.39% 0.40% 0.33% 0.31% 0.25% 0.25%

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%

Jun 30, 2016 1.53% 1.56% 1.48% 1.38% 1.26% 1.27%

Dec 31, 2016 1.99% 2.13% 2.04% 1.93% 1.75% 1.84%

0.50%

0.39% 0.40%

0.33% 0.31%

0.25% 0.25%

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%

1.53% 1.56%

1.48%

1.38%

1.26% 1.27%

1.99%

2.13%

2.04%

1.93%

1.75%

1.84%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Dec 2016

June 2016

Dec 2015

June 2015



14. 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%

Aug 20 Sep 16 Oct 28 Dec 16 Jan 27, '15 Mar 17



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

0%

5%

10%

15%

20%

25%

30%

35%

40%

Aug 20 Sep 16 Oct 28 Dec 16 Jan 27 '15 Mar 17

Average:

Aug 20 survey:

Q4 2017

Sep 16 survey

Q3 2017

Oct 28 survey

Q4 2017

Dec 16 survey

Q1 2018

Jan 27 survey

Q1 2018

Mar 17 survey

Q4 2017



16. How will lower oil prices affect U.S. GDP/core inflation in 2015?

0.27

-0.28

0.36

-0.23

-0.40

-0.30

-0.20

-0.10

0.00

0.10

0.20

0.30

0.40

GDP Inflation

Pct

. po

ints

Jan 27 Mar 17



17. What is your forecast for WTI crude oil's lowest price in the current downturn?

$39.58 $39.95

$20

$25

$30

$35

$40

$45

$50

Average Forecast

Jan 27 Mar 17



18. What is your forecast for the lowest level of the dollar vs. the euro in the current downturn??

$0.95

$0.80

$0.85

$0.90

$0.95

$1.00

$1.05

$1.10

Average Forecast

Mar 17



19. The ECB will hit its 2% inflation target within:

3%

22%

34%

13% 13%

16%

3%

25%

31%

14%

22%

6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

One year Two years Three years Four years Five or moreyears

Don'tknow/unsure

Jan 27 Mar 17

Averages:

Jan 27 survey: 3.11 years

Mar 17 survey: 3.29 years



20. Relative to the ECB's goal for QE of bringing inflation back towards its 2% target, the size of the program is:

33%

11%

36%

19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Big enough Just right Not big enough Unsure/don't know



21. How much concern do you have that economic weakness in Europe could create wider global risks? (1=Not concerned at all, 10=Highest level of concern)

5.4 5.4

4.8 5.0

4.7

0

1

2

3

4

5

6

7

8

9

10

Sep 16 Oct 28 Dec 16 Jan 27 '15 Mar 17



22. What is the percentage chance each of the following countries will leave the euro zone in the next 3 years? (0%=No chance of leaving, 100%=Certainty of leaving):

41%

13% 12%

9% 8%

3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Greece Portugal Spain Italy Ireland Germany



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

56%

36%

8%

53%

38%

9%

53%

47%

0% 0%

10%

20%

30%

40%

50%

60%

Yes No Don't know/unsure

Dec 16 Jan 27 Mar 17



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

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

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%

Apr 30 Jun 18 Jul 30 Sep 17 Oct 29 Dec 17 Jan 28 '14 Mar 18

Apr 28 Jul 29 Sep 16 Oct 28 Dec 16 Jan 27 '15 Mar 17



FED SURVEY April 30,

25. 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)

Aug

11,'11

Sep

19

Oct

31

Jan

23,'12

Mar

16

Apr

24

Jul

31

Sep

12

Dec

11

Jan

29,'13

Mar

19

Apr

30

Jun

18

Jul

30

Sep

6

Oct

29

Dec

17

Jan

28'14

Mar

18

Apr

28

Jul

29

Sep

16

Oct

28

Dec

16

Jan

27'15

Mar

17

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

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%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Survey Dates




26. What is your primary area of interest?

Comments: Robert Brusca, Fact and Opinion Economics: U.S. policy is not looking ahead. The Fed is looking over its shoulder afraid it has done

too much. It is too worried that the economy will 'suddenly accelerate' when there is no evidence of it and no reason to expect it. The Fed has moved into a period of policy irrationality. It is completely out of touch with what its inflation target means and

what missing it means. Thomas Costerg, Standard Chartered Bank: We do not think the removal of "patient" means automatically a hike three months later

in June; after all, pre-commitment is precisely what the Fed wants to avoid. The data will be key. We see the first rate hike in September as we think the Fed may want to see core PCE inflation finding a floor, which is unlikely before the summer. We think the fed funds

rate will level off at 2.0% by Q1-2017. The US business cycle is maturing and we think 2016-17 GDP growth could gradually lose

Economics 57%

Equities 26%

Fixed Income

9%

Currencies 0%

Other 9%




steam, especially if the Fed tightens policy. John Donaldson, Haverford Trust Co.: It is becoming clear that the FOMC is ready to answer the question: Does the economy still

warrant zero interest rates? with a resounding "NO". Neil Dutta, Renaissance Macro Research: All else equal, the dollar is negative for U.S. growth. In the real world, however, all else

is never equal. The rise in the dollar is broadly offset by lower long-term interest rates and oil prices. Thus, as a forecaster, we're forced to stick with the underlying momentum in the economy. While GDP tracking estimates ebb and flow for reasons unrelated to domestic

demand, the employment figures tell us that trend is around 3%. Dan Greenhaus, BTIG: The issue facing the Fed in coming months is the same as the one facing private investors; handicapping the

response to a rate hike in asset markets and, more importantly, money markets, is an incredibly difficult proposition. Stuart Hoffman, PNC Financial Services Group: Bears on the

economy will get boiled in cheap oil. Weak retail sales in Jan and Feb are deja vu all over again as will be a strong rebound in sales in March and April as weather returns to normal. Don't sell short the

American consumer! Art Hogan, Wunderlich Securities: The Market has priced in the negative effects of a strong $ and none of the positives that will

come next and be a powerful tailwind John Kattar, Ardent Asset Advisors: Low inflation, a strong dollar, and spotty economic data give the Fed some wiggle room if

they want to delay tightening. But I think their desire to normalize and create some dry powder for the next downturn trumps all. They will move in June.




David Kotok, Cumberland Advisors: Europe's negative interest rates are an awesome and powerful force. Market agents underestimate how much they encourage rising asset prices. They make us very bullish.

Subodh Kumar, Subodh Kumar & Associates: Raw geopolitics like the Middle East, Russia/Ukraine or even in Asia and economic politics like Greece, Argentina and Venezuela appear

underestimated. Adding in Fed changes and dollar gains means the capital markets, like Icarus in Greek mythology, may be flying too high on risk complacency. Restructuring and management quality should focus in holdings.

Guy LeBas, Janney Montgomery Scott: 1) Oil price declines could present a timing issue--energy businesses are cutting capex quickly, but consumers are accumulating savings slowly--that's negative in

the short term, but positive over 4 or more quarters. 2) The single biggest force in the financial world right now is the cash being placed in European investors' hands by the ECB. Money managers aren't being paid to sit on cash, and a portion of those funds will continue

to dribble into the U.S. bond markets. 3) Fed policymakers don't seem to have a good agreement on how a stronger dollar is likely to impact growth and inflation. Our thinking is that the stronger dollar

leads to imported deflation and a modest growth headwind, but a passage in January's FOMC minutes suggested some Fed officials believe otherwise.

John Lonski, Moody's: If the dollar is too strong then U.S. interest rates are too high vis-a-vis the rest of the world. As long as the 10-year German bund yields less than 0.5%, the 10-year US Treasury yield is unlikely to spend much time, if any, above 2.25%.

Joel Naroff, Naroff Economic Advisors: The markets are already assuming a Fed rate hike so dropping the patience term is a no-brainer. Those who haven't figured out that rates are going up and




are waiting to actually see it happen should not be factored into any Fed decision. James Paulsen, Wells Capital Management: Biggest near-term

risk for the Fed is a surprising bounce in foreign economic growth causing the U.S. dollar to peak and oil & other commodity prices to jump. If this happens as wages begin accelerating and as the U.S. unemployment rate nears 5%, Wall Street will increasingly fear the

Fed is far behind the curve. Lynn Reaser, Point Loma Nazarene University: While the Fed may seek a smooth and slow exit from monetary ease, stock and

bond markets, at least initially, will bolt for the door. John Roberts, Hilliard Lyons: We see the major risk of the Fed's eventual interest rate increases is their impact on forward earnings

growth as companies can no longer constantly re-finance debt at ever lower interest rates which has significantly added to corporate profit growth over the past five-plus years. This will eventually result in corporate profit growth declining and not meeting investor

expectations. John Ryding, RDQ Economics: The majority on the FOMC appear

increasingly aware that the economy is approaching full employment with the monetary pedal to the metal. I, like Jim Bullard, fear the Fed has already waited too long and expect hiking to begin in June.

Allen Sinai, Decision Economics: The transition by the Federal Reserve to a focus on raising inflation, raising interest rates, and jettisoning forward guidance is hugely important for all financial markets.

Hank Smith, Haverford Investments: Forget about ECB policy. European economic growth will be sub-average at best until member countries address fiscal structural reforms. What are the odds of that




happening any time soon? Diane Swonk, Mesirow Financial: Low inflation may be secular as well as cyclical in nature, reflecting changes in technology; this

complicates the game plan for the Fed, and how they manage the reach for yield. Mark Vitner, Wells Fargo: The soaring dollar and plunging oil

prices create a lot of noise for policymakers. We may be going back to a time of rolling recessions in certain parts of the economy (the oil patch, the rust belt, etc.) which cannot be effectively resolved with monetary policy.

Scott Wren, Wells Fargo Advisors: Janet Yellen and Company are going to be in no hurry to hike rates. The question as to whether a hike will occur in June or September is splitting hairs. The much

more important question is what will be the speed and magnitude of the hikes. In my opinion, it will take the Fed years to normalize rates. This cyclical bull market still has room to run.

cnbc fed survey, march 17, 2015

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