FED SURVEY

January 26, 2016

These survey results represent the opinions of 40 of the nations top money managers,
investment strategists, and professional economists.

FED SURVEY

They responded to CNBCs invitation to participate in our online survey. Their responses were
collected on January 21-22, 2016. Participants were not required to answer every question.

April 30,

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 January meeting, the Federal Reserve will:

0%

10%

Raise interest rates

0%

Lower interest rates

0%

20%

0%

CNBC Fed Survey January 26, 2016

Page 1 of 29

40%

50%

60%

70%

80%

90%

100%

100%

Keep rates unchanged

Don't know/unsure

30%

FED SURVEY
January 26, 2016
2. After January's meeting, the Federal Reserve's next
move will most likely be:

FED SURVEY
0% 10%

Jan 15

Jan 27

April 30,

20%

30%

40%

50%

60%

90% 100%

88%
18%

Lower interest rates

Launch new quantitative easing

80%

74%

Raise interest rates

Move to negative interest rates

70%

10%
0%
0%

8%
3%

When will the Federal Reserve make its next move?How many
times will the Federal Reserve hike rates this year
(2016)?
For respondents who said:

Average month:

Raise interest rates

(88%)

May 2016

Lower interest rates

(10%)

August 2016

Move to negative
interest rates (0%)

--

Launch new quantitative

easing (3%)

April 2016

CNBC Fed Survey January 26, 2016

Page 2 of 29

FED SURVEY
January 26, 2016
Dec 15

Jan 15

0%
5%
10%
FED
SURVEY

15%

2%
April
30,
0

Jan 26
20%

25%

29%

10%

7
8
9
10
More than 10
Fed will cut rates
Don't know/unsure

21%
15%
16%
15%

4%
3%

29%

7%

0%
0%
0%
0%
0%
0%

2%
3%
0%

CNBC Fed Survey January 26, 2016

Page 3 of 29

40%

45%

12%
14%
13%

35%

14%
13%

30%

Averages:
Dec 15 survey: 2.8
Jan 15 survey: 2.1
Jan 26 survey: 2.1

40%
40%

FED SURVEY
January 26, 2016
4. Please rate the following factors on how much influence
they had on the recent stock sell-off. (5=Maximum
influence,FED
0=Minimum
influence)
SURVEY

April 30,
0

Average response
2
3

Other

4.33

Oil price decline

4.10

Slowdown in China
growth

3.77

Slowdown in global
growth

3.58

Fed forecast for an

average of four rate
hikes this year

2.89

Normal market volatility

after recent strong gains

2.63

Slowdown in US
economic growth

2.44

Recent Fed rate hike

2.42

Other:

Bull markets eventually end

and this one has been the third
longest in history.
Global (including US) economy
is still so weak, that the
market needs Fed to help it
out.
Irrationality

CNBC Fed Survey January 26, 2016

Page 4 of 29

Markets implicitly became too

far ahead of deliverable growth
whether economic or company.
Profits recession not expected
to end until Q4.
The observable fundamentals
look decent. What troubles the
market are the unobservable
risks.

FED SURVEY
January 26, 2016

Italian banking crisis is missed

by markets. High yield
meltdown FED
is missed
by
SURVEY
markets. April 30,
The Fed Dec. rate hike and 4hike forecast is only one of
many factors that combined
have led to the selloff and
increased volatility.
The severity of both the oil
price drop and the slowdown in
China were consensusdestroying moves.
Stupid pet tricks on the part of
the Fed. Its dogmatic approach
to policy is not appreciated in
this era where new thinking (or
at least SOME thinking) is
required. The Fed is so knee
jerk.
Oil price decline viewed as a
negative sign for US and global
economy but will come to be
seen as positive once oil price
stops falling.

CNBC Fed Survey January 26, 2016

Page 5 of 29

Winter consumer spending was

disappointing especially in light
of the theoretical boost from
low gas prices. Low oil prices
are now mostly seen as bad
news, a U turn from the
general view a few months
ago.
Effect of oil price decline on
high yield (HY) bond spreads of
energy and commodity related
issuers. Wider HY spreads for
issuers outside of energy and
commodities as well. The
tendency of widening HY
spreads to precede a
meaningful slowdown or a
recession in the U.S. has been
a big negative influence on the
stock market.
China is new at currency
devaluation and it makes us
nervous. They will get better
and we will calm down.
Fear mongering and risk
aversion. Political uncertainty
and lack of reasonable
candidates with
comprehensible platforms.

FED SURVEY
January 26, 2016
5. What impact will the recent stock market sell-off have on
the Fed?

FED SURVEY
April 30,

60%

56%

50%

40%

36%

30%

20%

10%

5%
3%
0%

Will delay future

hikes

Will have no effect

on future hikes

CNBC Fed Survey January 26, 2016

Page 6 of 29

Will prompt Fed to

cut rates or ease
policy further

Don't know/unsure

FED SURVEY
January 26, 2016
6. How will the recent declines for stocks and Treasury
yields affect the economy in the first quarter?

FED SURVEY
0%
April 30,

40%

50%

60%

70%

40%

61%

0%

CNBC Fed Survey January 26, 2016

Page 7 of 29

30%

0%

Have no effect on growth

Don't know/unsure

20%

Average reduction:
0.4 percentage points

Reduce growth

Increase growth

10%

FED SURVEY
January 26, 2016
7. How serious a concern is China for the US economy?
(10=Highest level of seriousness, 1=Not serious at all)

FED SURVEY

10

April 30,

5.1
5

4.6

4.7

4.7

Oct 27

Jan 26

1
Aug 25

Sep 16
Survey Dates

CNBC Fed Survey January 26, 2016

Page 8 of 29

FED SURVEY
January 26, 2016
8. Where do you expect the S&P 500 stock index will be on
?

FED SURVEY
December 31, 2016

December 31, 2017

April 30,
2,350

2311

2296

2293

2,300

2259

2,250

2254

2223

2247
2,200

2166

2,150

2158

2159
2140

2,100

2107
2035

2,050

2,000

2000
1,950

1,900

1,850

1,800
Dec 16 Jan 27 Mar 17 April Jun 16 Jul 28
'15
28
Survey Dates

CNBC Fed Survey January 26, 2016

Page 9 of 29

Sept
16

Oct 27 Dec 15 Jan 15 Jan 26

'16

FED SURVEY
January 26, 2016
9. What do you expect the yield on the 10-year Treasury
note will be on ?

FED SURVEY
December 31, 2016

December 31, 2017

April 30,
4.0%

3.52%

3.5%

3.24%
3.17%

3.14%

3.0%

3.09%

3.04%
2.89%

2.88%

2.88%

2.67% 2.67%
2.5%
2.51%

2.0%
Dec 16 Jan 27 Mar 17 April 28 Jul 16
'15

Jul 28 Sept 16 Oct 27 Dec 15 Jan 26

'16

Survey Dates

CNBC Fed Survey January 26, 2016

Page 10 of 29

FED SURVEY
January 26, 2016
10.
Where do you expect the fed funds target rate will
be on ?

FED SURVEY
Dec 31, 2016

Dec 31, 2017

April 30,

2.5%

2.13%
1.99%

2.04%
1.93%

2.0%

1.84%

1.75%

1.56%

1.61%

1.5%

1.41%

1.61%

1.62%

1.46%
1.17%

1.12%

1.0%

0.88%
0.91%0.90%

0.85%

0.5%

0.0%
Aug Sep
20
16

Oct
28

Dec Jan Mar April Jun

16 27, 17
28
16
'15

CNBC Fed Survey January 26, 2016

Page 11 of 29

Jul
28

Aug Sept Oct

25
16
27

Dec Jan
15
15
'16

Jan
26

FED SURVEY
January 26, 2016
11.
At what fed funds level will the Federal Reserve stop
hiking rates in the current cycle? That is, what will be the
SURVEY
terminalFED
rate?
April 30,
4.0%

3.5%
3.30%
3.20%

3.16%

3.17%
3.11%
3.04%

3.06%

3.0%

2.85%

2.98%

2.79%
2.69%
2.65%
2.58%

2.5%

2.56%

2.0%
Aug Sep Oct Dec Jan Mar Apr Jun Jul Aug Sept Oct Dec Jan
20 16 28 16 27, 17 28 16 28 25 16 27 15 26
'15
'16
Survey Dates

CNBC Fed Survey January 26, 2016

Page 12 of 29

FED SURVEY
January 26, 2016
12.
When do you believe fed funds will reach its
terminal rate?

FED SURVEY

Survey
Date
April
30,

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

CNBC Fed Survey January 26, 2016

Page 13 of 29

FED SURVEY
January 26, 2016
13.
What is your forecast for the year-over-year
percentage change in real U.S. GDP for ?

FED SURVEY

2016

April 30,

2017

3.0%

2.9%
+2.88%
+2.84%

2.8%

+2.81%

+2.80%

+2.78%

2.7%
+2.70%
+2.64%

2.6%

+2.60%

2.5%
+2.45%
+2.43%

2.4%

2.3%

2.31%

2.2%
2.17%

2.1%
Dec 16
2016 +2.88%

Jan 27,
'15

Mar 17

April 28

Jun 16

Jul 28

Sept 16

Oct 27

Dec 15

Jan 26
'16

+2.80%

+2.84%

+2.81%

+2.78%

+2.70%

+2.64%

+2.60%

+2.45%

2.17%

+2.43%

2.31%

2017

CNBC Fed Survey January 26, 2016

Page 14 of 29

FED SURVEY
January 26, 2016
14.
What is your forecast for the year-over-year
percentage change in the headline U.S. CPI for ?

FED SURVEY
April 30,

2016

2017

2.4%

2.17%

2.2%

2.17%

2.17%

2.12%

2.07% 2.08%

2.07%

2.0%
1.89%

1.96%

1.88%

1.8%
1.75%
1.6%

1.50%
1.4%

1.2%

1.0%
Dec 16 Jan 27, Mar 17 April 28 Jun 16 Jul 28 Sept 16 Oct 27 Dec 15 Jan 26
'15
'16
Survey Dates

CNBC Fed Survey January 26, 2016

Page 15 of 29

FED SURVEY
January 26, 2016
15.
When do you expect the Fed to allow its balance
sheet to decline?

FED SURVEY

AprilDate
30,
Survey

Balance Sheet
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

CNBC Fed Survey January 26, 2016

Page 16 of 29

FED SURVEY
January 26, 2016
16.
How would you characterize the Fed's monetary
policy?

FED SURVEY

Too accommodative

April 30,

Just right

Too restrictive

Don't know/unsure

70%
64%
60%

Too accomodative

60%

54%
49% 49% 49% 49%

50%
43%

50%
44%

47%

46%

49%

47%

46%

43% 44%

43%

40%

50% 50%

54%

39%
33%

35%

32%

32%

30%

36%

Just right
28%
23%

20%

17%
13%

Don't know/unsure
10%

13%

8%
6%

6%

5%

3%
3%

0%

3%

6%
6%

3%

3%

10%

10%

8%
6%

3%

5%

3%

6%
Too restrictive

8%
4% 5%

5%

Jul 31, Jul 29, Aug Sep 16 Oct 28 Dec 16 Jan Mar 17Apr 28 Jun 16 Jul 28 Sept Oct 27 Dec 15Jan 26
'12
'14
20
27, '15
16
'16

CNBC Fed Survey January 26, 2016

Page 17 of 29

FED SURVEY
January 26, 2016
17.
The Federal Reserve's December interest rate hike
was:

FED SURVEY

100%

April 30,

90%
80%

80%

70%

60%
50%
40%

30%

15%

20%

5%

10%
0%
A mistake

The right move

Don't know/unsure

(For those answering a mistake) Why was it a mistake?

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

50%
33%
17%

Negative effect on stocks

Other answer:

Negative effect on
economic growth

Other

All the above. But also and MOSTLY because it made no sense. The Fed

had not met its own minimal objectives for a rate hike but instead chose to LIE about it. NO WAY
inflation was on a path to 2% with the dollar strong and oil plummeting. The Fed lost a lot of
credibility with that move.

CNBC Fed Survey January 26, 2016

Page 18 of 29

FED SURVEY
January 26, 2016
18.
How will lower oil prices affect your GDP
growth forecast for 2016?
0%
5%
FED SURVEY

10%

15%

20%

25%

30%

35%

April 30,

Reduce growth

Increase growth

Average reduction:
0.5 percentage points

Average increase:
0.3 percentage points

CNBC Fed Survey January 26, 2016

Page 19 of 29

31%

33%

Have no effect on growth

Don't know/unsure

23%

13%

40%

FED SURVEY
January 26, 2016
19.
How will lower oil prices affect your core CPI
forecast for 2016?
0%
10%
FED SURVEY

20%

30%

40%

50%

60%

70%

April 30,
Average reduction:
0.4 percentage points

Reduce inflation

5%

Increase inflation

Have no effect on
inflation

Don't know/unsure

31%

0%

CNBC Fed Survey January 26, 2016

Page 20 of 29

Average increase:
0.4 percentage points

64%

FED SURVEY
January 26, 2016

20%
15%
8%
4%
8%
5%
7%
10%
3%
12%
6%
31%
40%
0%
6%
3%
3%
6%
0%
0%
0%
0%

31%
28%
30%
27%
29%
32%
21%
23%
26%
29%
26%
18%
14%
13%
14%
11%
17%
21%
16%
8%
10%
10%

20%
20%
22%
22%
24%
29%
30%
26%
21%
12%
29%
15%
14%
9%
0%
8%
3%
9%
2%
5%
5%
5%

0%
3%
0%
2%
3%
2%
2%
3%
3%
6%
6%
3%
3%
0%
3%
3%
0%
0%
0%
3%
0%
0%

Other responses:
Faster wage growth against backdrop
of low productivity squeezing profit
margins
Fear and cowardice on the part of the
American people, oh, and Donald
Trump
Fed
Secular changes in consumption and
debt tolerance

CNBC Fed Survey January 26, 2016

Page 21 of 29

2%
3%
2%
0%
3%
0%
0%
5%
5%
3%
3%
3%
6%
0%
6%
0%
0%
0%
4%
8%
0%
3%

2%
0%
2%
4%
3%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%

10%
18%
8%
15%
12%
5%
8%
12%
6%
10%
3%
6%
6%
6%
14%
12%
0%
8%
8%
0%

18%
12%
11%
8%
14%
16%
8%
11%
25%
6%
8%
13%
10%
5%

41%
28%
28%
22%
29%
45%
41%
44%
44%

6%
17%
8%
6%
9%
8%
10%
5%
8%

3%
0%

Don't know/
unsure

Other

Terrorist attacks in the

U.S.

Slow wage growth

Debt ceiling

Deflation

Inflation

Slow job growth

Tax/
regulatory policies

Survey
Date
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
April 28
Jun 16
Jul 28
Sept 16
Oct 27
Dec 15
Jan 26 '16

European recession/
financial crisis

April 30,

Global econ weakness

Rise in interest rates

FED SURVEY

Geopolitical risks

20.
What is the single biggest threat facing the U.S.
economic recovery?

11%
13%
14%
7%
13%
2%
21%
18%
13%
12%
11%
8%
3%
16%
14%
19%
11%
9%
14%
5%
15%
23%

The Fed
Decelerating monetary aggregates
Lower than expected business sales
Policy mistake here or abroad
Fed having to continue raising
interest rates even though real GDP
growth remains near 2.5%-ish
because wages and core CPI inflation
continue to rise

0%
0%
4%
2%
0%
2%
0%
0%
0%
3%
3%
3%
0%
0%
0%
3%
0%
0%
2%
0%
0%
3%

FED SURVEY
January 26, 2016
21.
In the next 12 months, what percent probability do
you place on the U.S. entering recession? (0%=No
FED
SURVEY
chance of
recession,
100%=Certainty of recession)
April 30,
40%
36.1%

35%
34.0%

30%

28.8%

28.5%

25.9%

25%

26.0%

25.5%

24.1%

22.9%
22.1%

20%

20.3% 20.6%

18.4%

20.4% 18.2%

17.3%

19.1%
17.6%

15%

16.9%

18.6%
16.2%

17.4%

15.1%

16.9%
16.2%
15.3%

15.2%

16.4%

14.6%

15.1%

15.0%

14.7%
13.6%
13.0%

10%

5%

0%

Aug
Sep Oct
11,
19
31
'11

Jan
23,
'12

Mar
16

Apr
24

Jul
31

Sep Dec
12
11

Jan
29,
'13

Mar
19

Apr
30

Jun
18

Jul
30

Sep Oct
6
29

Dec
17

Jan
28
'14

Mar
18

Apr
28

Jul
29

Sep Oct
16
28

Dec
16

Jan
27
'15

Mar April Jun

17
28
16

Jul Sept Oct

28 16
27

Dec
15

Jan
15
'16

Jan
26

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

Survey Dates

CNBC Fed Survey January 26, 2016

Page 22 of 29

FED SURVEY
January 26, 2016
22.

What is your primary area of interest?

FED SURVEY
April 30,

Currencies
0%

Other
15%

Fixed
Income
13%

Economics
48%

Equities
25%

Comments:
Marshall Acuff, Silvercrest Asset Management: The principal
headwind for US stocks has been and will continue to be declining
earnings growth expectations in a market that continues to be fair to
fully valued.
John Augustine, The Huntington National Bank: The 4-Cs for
stocks to stabilize - traction in commodity prices, confidence,
corporate profits and currencies.
Jim Bianco, Bianco Research: Famously the markets have
predicted 9 of the last 5 recessions. This is a better record than
economists! Pay attention to markets.

CNBC Fed Survey January 26, 2016

Page 23 of 29

FED SURVEY
January 26, 2016
Robert Brusca, Fact and Opinion Economics: Depressing dilly of
a monetary policy. Fed is dogmatic and not at all keeping its eye on
FEDofSURVEY
the bouncing ball
growth and of changing fortunes. The Fed has
April
decided already
that30,
we will, WILL, have mean reversion as it is
simply TIME for things to get back to normal so they will and
monetary policy will tighten to anticipate that event. What a screwed
up bit of arrogance from the Fed after being so clueless all recovery
long and about the oncoming recession itself. In my view, the new
regulations on banks implemented by using stress tests on banks are
so different and so highly restrictive bank lending is not going to do
anything like fostering inflation for a very long time, if ever.
Normalcy is gone forever. Instead we have this whatever you want
to call it. The Fed itself has become the biggest risk to growth.
Thomas Costerg, Standard Chartered Bank: In December the
Fed probably intended to hike rates again in March, but they
probably did not expect such market volatility. The Fed is very
sensitive to market sentiment and a sharp increase in the VIX could
delay the next hike. March remains our main scenario; the VIX index
will be key. The risk of a recession remains quite high as financial
conditions are tightening and lower oil prices are now mostly a
negative. The Fed may end up cutting rates sooner than widely
expected, in our view. (We expect the Fed to be back at near zero
levels by March 2017)
John Donaldson, Haverford Trust Co.: A second Fed move was
never likely for this meeting. The market volatility has taken March
off the table as well. Perhaps June for the second move.

CNBC Fed Survey January 26, 2016

Page 24 of 29

FED SURVEY
January 26, 2016
Neil Dutta, Renaissance Macro Research: In 2015, core inflation
was broadly stable despite a rapid appreciation in the dollar
SURVEY
exchange rateFED
and collapse
in energy prices. Thus, as these factors
April 30,
abate, core inflation
has room to accelerate in 2016. The recent sell
off in risk assets undoubtedly complicates the Fed's tightening plans.
However, any delay is likely to be tactical given the broad set of
macro-economic conditions that are in place. After all, the
unemployment rate is 5.0% with core inflation moving to target.
We would be surprised if the Fed hiked only once or twice in 2016.
Three or four hikes appears to be a reasonable baseline path.
Mike Englund, Action Economics: The longer-term Fed policy
outlook shouldn't be changing daily with daily changes in stock
prices. Only changes in underlying fundamentals should drive the
longer-term policy outlook, and there is little evidence that the stock
market sell-off is being driven by deteriorating fundamentals.
Stuart Hoffman, PNC Financial Services Group: In the past 35
years, stock market "corrections" (10+% declines) predicted 21 of
the last 5 recessions!
Art Hogan, Wunderlich Securities: This is not 2008 and the
sooner we stop that analogy the better off markets will be. We are
going through a normal market correction, not a financial crisis.
John Kattar, Ardent Asset Advisors: The Fed's decision to
gradually normalize policy is the right one, despite recent
dislocations in markets. However, I think that the transition would
be easier if the Fed shifted its focus from rates to the balance sheet.
Given the cumulative effects of QE, managing rates is awkward and
only possible with blunt tools like massive reverse repos and the
IOER.

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FED SURVEY
January 26, 2016
David Kotok, Cumberland Advisors: The Italian banking system
is in crisis. That is driving market risk. So is the high-yield
FED
meltdown. China
is SURVEY
only one factor. Oil is reaching levels of entry
April
and transmission
of30,
low oil to growth takes about a year.
Subodh Kumar, Subodh Kumar & Associates: In addition to
evolving central bank policy, other considerations emerge. Recent
challenges persist whether closer to one end of the spectrum like
China with a managed economy or closer to the other like the United
States with a freer economy. Geopolitical issues remain, including
the U.S election. In the markets, the rise in junk and emerging
market bond yields continues, reflecting marked increases in
leverage over the last cycle. In equities, rebalancing between value
and erstwhile momentum fervor is taking place. Market behavior
looks classical to us. More focus has emerged now in the markets on
our long held favor for focus on quality of delivery and financial
structure. Globally, change in equity market leadership is likely to
come from U.S. markets first and then, as is classical, once global
growth is firmly established, flow into emerging markets. Other
markets would be in between with rotation dependent on growth
delivery. Sector wise, the financials are likely to be crucial to change
in the markets.
Guy LeBas, Janney Montgomery Scott: The Fed isn't "supposed"
to consider a market selloff in its mission--unless that selloff causes
tighter credit conditions (it is somewhat) or reflects weaker market
participants' expectations for the economy (it may be). We can no
longer ignore the prospect that the risk asset selloff represents a
prediction of deteriorating US economic growth or recession 6 - 12
months down the road.
John Lonski, Moody's: Persistently wide high-yield bond spreads
might yet reduce access to affordable business credit.

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FED SURVEY
January 26, 2016
Ward McCarthy, Jefferies: China is a bigger threat to US inflation
than it is to US growth.

FED SURVEY

Rob Morgan,April
Sethi30,
Financial Group: The Fed says they'll raise
rates 4 times this year and I believe them. US job growth is
accelerating and inflation is coming into the Fed's desired band. The
desire by the Fed to have ammo to fight the next recession - higher
rates -will trump concerns over the recent stock market correction.
Joel Naroff, Naroff Economic Advisors: This too shall pass and
when it does, the markets, especially Treasuries, will rebound as
more realistic growth estimates are factored into earnings
projections.
James Paulsen, Wells Capital Management: It is still a long time
until the March Fed meeting. Should the financial market stabilize
(even at a lower level) and US economic growth reports remain
okay, I believe the Fed will still raise rates at the March meeting and
indicate it is still on the path of 4 hikes during 2016. Core consumer
price inflation and wage inflation are likely to keep rising should US
real GDP growth remain in the 2.25% to 2.75% range, forcing the
Fed to keep raising interest rates.
Lynn Reaser, Point Loma Nazarene University: Financial
markets have started off 2016 with a major case of the flu, which is
threatening to spread from business to consumers to the Fed. While
painful, some downtime was probably necessary and is unlikely to
develop into pneumonia or a bear market and recession.

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FED SURVEY
January 26, 2016
John Roberts, Hilliard Lyons: We see 2016 as a "Tale of two
markets," with a significant early year sell-off--potentially of bear
FED SURVEY
market magnitude--driven
by earnings shortfalls, low oil prices and
30, weakness, reversing in a bull market second
general globalApril
economic
half, as oil prices begin to rise, and earnings surprises reverse to the
upside and markets move up significantly as investors anticipate an
improving pricing environment for the commodity and energy
complexes in 2017.
Merrill Ross, Wunderlich: US monetary policy is not going to be
effective until there is greater synchronicity in global markets. The
US, like Norway, Canada, Japan and other countries, will be unable
to achieve escape velocity and will be back at the zero bound before
the target rate is at 3%.
Chris Rupkey, Bank of Tokyo-Mitsubishi: I privately feel we are
all doomed, despite my sunny economic forecast. Build a panic
room.
John Ryding, RDQ Economics: Recent volatility in markets is
contagion but the disease is unclear. Lower oil prices are first
negative for growth and then positive. China's market is deflation of
a bubble. We see nothing fundamental in market dips and expect
the Fed to look through this in March.
Allen Sinai, Decision Economics: Financial turmoil and stock
market swoon are overdone, especially with additional policy
stimulus to come from outside the U.S.
Hank Smith, Haverford Investments: More than ever the US
economy needs corporate tax reform and regulatory relief (so too
Europe). Alas that won't happen this year...maybe '17?

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FED SURVEY
January 26, 2016
Peter Tanous, Lynx Investment Advisory: We have recently
been in the third-longest bull market in history. Bull markets end.
Get used to it.FED SURVEY
April 30,
Scott Wren, Wells Fargo Investment Institute: In our opinion,
the recent correction is based on fear, not fundamentals. The
modest growth/modest inflation environment of the last 5 years
should continue throughout this year and into next. We do not see
the U.S. economy slipping into recession and see stocks higher over
the next 12-month period. This correction is an opportunity for retail
investors who can look through the nearer term volatility and take a
12+ month outlook.

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