FED SURVEY

September 20, 2016

These survey results represent the opinions of 41 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 September 15-17, 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 September meeting, the Federal Reserve will:

Aug 24
0%

10%

20%

30%

Sep 20
40%

50%

60%

70%

80%

90%

100%

21%

Raise interest rates

7%

Lower interest rates

0%
0%

80%

Keep rates unchanged

90%

Don't know/unsure

0%
2%

CNBC Fed Survey September 20, 2016

Page 1 of 33

FED SURVEY
September 20, 2016
(For the 90% answering rates would be kept unchanged)

What is the main reason the Fed will keep rates unchanged
at its upcoming
meeting?
FED SURVEY
April 30,
Aug 24
Sep 20
0%

5%

10%

15%

20%

25%

Global growth
concerns

33%
25%
37%

22%

Upcoming
presidential
election

Uncertainty
surrounding
Brexit

11%

0%
11%
3%
0%
0%
0%

Note: Upcoming presidential election was not offered as a choice in the August survey.

Other(September survey only):

Inconsistent economic data

Asymmetry of risks at zero lower
bound
Don't need to hike
Too much of the recent economic
data has shown unexpected
weakness

CNBC Fed Survey September 20, 2016

Page 2 of 33

40%

31%

Markets
unprepared for
rate hike

Don't
know/unsure

35%

27%

Other

Inconsistent or
weak jobs
growth

30%

Risk management: better to err on

the side of being too dovish
Soft incoming data prints (ISM
surveys, hiring to a degree) and
markets unprepared
All of the above
Risk aversion

FED SURVEY
September 20, 2016
(For the 7% answering rates will be raised)

What is the main reason the Fed will hike at its upcoming
meeting? FED SURVEY
April 30,
0%

It's largely met its

employment and
inflation mandates

10%

20%

30%

40%

0%

33%

0%

Other:

One rate hike for the year, might as well be September

CNBC Fed Survey September 20, 2016

Page 3 of 33

70%

67%

Other

Don't
know/unsure

60%

0%

Concern about
financial stability

Concern about
future inflation

50%

80%

FED SURVEY
September 20, 2016
2. After its upcoming meeting, the Federal Reserve's next
directional move will most likely be:

FED SURVEY
April 30,

Raise interest rates

Lower interest rates

Move to negative interest rates

Launch new quantitative easing

100%

100%
95%

94%

90%

88%

90%

98%
92%

Raise interest rates

80%

70%

60%

50%

40%

30%

Lower interest rates

20%

10%

10%

10%

Launch new quantitative easing

4%

5%

3%

2%

0%

Jan 27

Mar 15

Apr 26

Jun 14

CNBC Fed Survey September 20, 2016

Page 4 of 33

Jul 26

Aug 24

Sep 20

FED SURVEY
September 20, 2016
(For the 98% answering the next move will be to raise rates)

When will the Federal Reserve take this action?

FED SURVEY

100%

April 30,
88%

90%

80%

70%

60%

50%

40%

30%

20%

10%

2% 2%

5%

2%

0%

Oct

Nov Dec Jan Feb Mar Apr May Jun

2017

CNBC Fed Survey September 20, 2016

Page 5 of 33

Jul

Aug Sep After

Sep

FED SURVEY
September 20, 2016
3. How many times will the Federal Reserve hike rates this year
(2016)?

FED SURVEY
April 30,

5.00

4.50

4.00

3.50

3.00

2.83

2.50

2.10
1.88

2.00

1.60

1.54

1.50

0.86

1.00

0.95

0.98

0.50

0.00

Dec 15
'15

Jan 26
'16

Mar 15 Apr 26

Jun 14

Survey Dates

CNBC Fed Survey September 20, 2016

Page 6 of 33

Jul 26

Aug 24 Sep 20

FED SURVEY
September 20, 2016
4. The current presidential campaign is:
Positive for economic outlook

FED SURVEY
Negative for economic outlook

April 30, Having no effect on economic outlook

70%

Negative
61%
60%

58%

56%

60%

60%

58%

50%

42%

40%

39%

40%

37%

40%

38%
No effect

30%

20%

10%

Positive

5%
2%

3%

Apr 26

Jun 14

2%

0%

0%

Aug 24

Sep 20

0%

Mar 15

CNBC Fed Survey September 20, 2016

Page 7 of 33

Jul 26

FED SURVEY
September 20, 2016
5. Which would be the best presidential election outcome for the
economy?

FED SURVEY
A Democrat wins

A Republican wins

April 30,

Doesn't matter

Don't know/unsure

50%

47%

Republican Wins
45%

40%

43%
40%
37%

37%

35%

36%

35%

33%
Democrat wins

30%

26%

30%

28%
26%

25%

23%

Don't know/unsure

24%
20%

18%

15%

16%

23%

21%

15%

10%

10%
9%

8%

5%

8%

Doesn't matter

0%

Mar 15

Apr 26

Jun 14

Jul 26

Aug 24

Sep 20

Note: Starting with the question in the August survey Republican wins was changed to Trump wins and
Democrat wins was changed to Clinton wins

CNBC Fed Survey September 20, 2016

Page 8 of 33

FED SURVEY
September 20, 2016
6. Which candidate has best economic policies?
Clinton
FED SURVEY
60%

Trump

Don't know/unsure

April 30,

49%

50%

45%

44%

42%

40%

40%

30%

30%
25%

32%

31%

24%

20%

21%

18%

10%

0%

Jun 14

Jul 26

CNBC Fed Survey September 20, 2016

Page 9 of 33

Aug 24

Sep 20

FED SURVEY
September 20, 2016
Which candidate would be best for the stock market?

FEDClinton
SURVEYTrump

Don't know/unsure

April 30,

60%

53%
50%

47%

40%

38%
38%
31%

32%

30%

26%
25%
20%

21%

21%

Aug 24

Sep 20

10%

0%

Jun 14

Jul 26

CNBC Fed Survey September 20, 2016

Page 10 of 33

FED SURVEY
September 20, 2016
7. Who is most likely to win this year's presidential election?
90%

Clinton
FED SURVEY

Trump

April 30,
80%

Don't know/unsure

84%
80%

80%

70%

60%

52%

50%

51%

40%

30%

26%

20%

13%

15%

26%

23%
21%

11%

10%

7%
0%
Apr 26

Jun 14

CNBC Fed Survey September 20, 2016

Page 11 of 33

5%

5%
Jul 26

Aug 24

Sep 20

FED SURVEY
September 20, 2016
8. Where do you expect the S&P 500 stock index will be on ?
December 31, 2016

December 31, 2017

FED SURVEY
2,350

2311
2,300

April 30,
2296

2,250

2247

2293

2259

2275
2254

2166

2158
2149

2159

2160

2114

2140

2,100

2255

2196
2183

2200

2,200

2,150

2234

2223

2249
2244

2107

2088

2,050

2035
2,000

2000
1,950

1,900

1,850

1,800
Dec Jan Mar April Jun Jul Sept Oct Dec Jan Jan Mar Apr Jun Jul Aug Sep
16 27 17 28 16 28 16 27 15 15 26 15 26 14 26 24 20
'15
'16
Survey Dates

CNBC Fed Survey September 20, 2016

Page 12 of 33

FED SURVEY
September 20, 2016
9. What do you expect the yield on the 10-year Treasury note will
be on ?

FED SURVEY
April 30,

December 31, 2016

December 31, 2017

4.0%

3.52%
3.5%

3.14%
3.0%

3.24%
3.17%
3.09%
2.88%
2.83%

3.04%
2.89%

2.88%

2.67%

2.58%

2.67%

2.5%

2.51%

2.54%

2.34%

2.24%

2.28%
2.26%

2.11%
2.10%

2.0%

1.78%
1.76%

1.75%

1.5%

1.0%

Dec Jan Mar April Jul

16 27 17 28 16
'15

Jul Sept Oct Dec Jan Mar Apr Jun

28 16 27 15 26 15 26 14
'16
Survey Dates

CNBC Fed Survey September 20, 2016

Page 13 of 33

Jul Aug Sep

26 24 20

FED SURVEY
September 20, 2016
10.
?

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

FED SURVEY Dec 31, 2017

Dec 31, 2016

April 30,

2.5%

Dec 31, 2018

2.17%

2.13%
2.04%

2.07%

2.0%
1.99%

1.93%

1.87%

1.84%

1.75%

1.61% 1.62%

1.56%

1.5%

1.61%

1.60%

1.49%

1.43%
1.17%

0.5%

0.0%

CNBC Fed Survey September 20, 2016

1.22%
1.18%
1.16%

1.12%
0.88%
0.84%

0.91% 0.90%
0.85%

Page 14 of 33

1.81%

1.41%

1.46%

1.0%

1.78%

0.78%

0.74%

0.61%
0.59%

0.59%

FED SURVEY
September 20, 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%

3.17%
3.11%

3.16%
3.0%

3.04%

3.06%
2.98%

2.85%2.79%

2.5%

2.69%
2.65%
2.58%

2.73%

2.65%
2.64%
2.56%

2.48%

2.42%
2.29%

2.0%

Survey Dates

CNBC Fed Survey September 20, 2016

Page 15 of 33

FED SURVEY
September 20, 2016
12.

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

FED SURVEY

Survey Date

April 30,

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

Jul 26 survey

Q4 2018

Aug 24 survey

Q4 2018

Sep 20 survey

Q4 2018

CNBC Fed Survey September 20, 2016

Page 16 of 33

Forecast

FED SURVEY
September 20, 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%
+2.88%

+2.84%
+2.81%
+2.78%

2.8%

+2.80%

+2.70%
+2.64%
+2.60%

2.6%

+2.43%

2.4%

+2.45%
+2.41%

+2.31%

2.2%

+2.17%

+2.28%
+2.25% +2.26%
+2.24%

+2.21%

+2.14%

+2.08%
+2.05%

2.0%
+1.95%
+1.88%

1.8%

+1.82%

1.6%
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

Jul 26

Aug
24

Sep
20

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 +2.08 +1.88 +1.82
2017

CNBC Fed Survey September 20, 2016

Page 17 of 33

+2.43 +2.31 +2.41 +2.21 +2.25 +2.26 +2.24 +2.28

FED SURVEY
September 20, 2016
14.
What is your forecast for the year-over-year percentage
change in the headline U.S. CPI for ?

FED SURVEY

2016

April 30,

2017

2.4%

2.17%
2.24%
2.2%

2.17%

2.17%
2.08%

2.12%
2.09%

2.12%

2.07%

2.0%

2.20%

2.13%

2.07%
1.96%

2.02%

1.89%1.88%

1.8%

1.72%

1.75%

1.75%

1.66%

1.6%

1.51%
1.57%
1.50%

1.4%

1.45%

1.2%

1.0%
Dec Jan Mar April Jun
16 27, 17 28 16
'15

Jul Sept Oct Dec Jan Mar Apr Jun

28 16 27 15 26 15 26 14
'16
Survey Dates

CNBC Fed Survey September 20, 2016

Page 18 of 33

Jul Aug Sep

26 24 20

FED SURVEY
September 20, 2016
15.
When do you expect the Fed to allow its balance sheet to
decline?

FED SURVEY
April
30,
0%

10%

20%

30%

40%

50%

60%

Sep '16
Oct '16

Nov '16
Dec '16

5%

Jan '17
Feb '17
Mar '17
Apr '17

5%
3%

May '17
Jun '17
Jul '17

10%
5%

After Jul '17

Never

CNBC Fed Survey September 20, 2016

Page 19 of 33

51%
21%

FED SURVEY
September 20, 2016

20%
15%
8%
4%
8%
5%
7%
10%
3%
12%
6%
31%
40%
0%
6%
3%
3%
6%
0%
0%
0%
0%
5%
0%
0%
2%
3%
0%

31%
28%
30%
27%
29%
32%
21%
23%
26%
29%
26%
18%
14%
13%
14%
11%
17%
21%
16%
8%
10%
10%
21%
22%
28%
20%
19%
16%

20%
20%
22%
22%
24%
29%
30%
26%
21%
12%
29%
15%
14%
9%
0%
8%
3%
9%
2%
5%
5%
5%
3%
2%
5%
7%
3%
11%

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

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

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

Other responses:

Lack of animal spirits/excessive pessimism

Current policy
Deflation
Weak consumer demand

CNBC Fed Survey September 20, 2016

Page 20 of 33

10%
18%
8%
15%
12%
5%
8%
12%
6%
10%
3%
6%
6%
6%
14%
12%
0%
8%
8%
0%
5%
0%
3%
2%
3%
0%

18%
12%
11%
8%
14%
16%
8%
11%
25%
6%
8%
13%
10%
5%
5%
7%
0%
10%
3%
3%

41%
28%
28%
22%
29%
45%
41%
44%
44%
33%
36%
28%
22%
31%
30%

6%
17%
8%
6%
9%
8%
10%
5%
8%
5%
9%
8%
7%
3%
8%

3%
0%
0%
0%
0%
0%
3%
5%

3%
7%
5%
7%
6%
5%

13%
7%
14%
8%

11%
13%
14%
7%
13%
2%
21%
18%
13%
12%
11%
8%
3%
16%
14%
19%
11%
9%
14%
5%
15%
23%
21%
11%
10%
7%
11%
11%

Don't know/
unsure

Other

Protectionist trade
policies

Outcome of US
presidential election

Terrorist attacks in the

U.S.

Slow wage growth

Global econ weakness

Debt ceiling

Deflation

Inflation

Slow job growth

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
Mar 15
Apr 26
Jun 14
Jul 26
Aug 24
Sep 20

Tax/
regulatory policies

April 30,

Geopolitical risks

European recession/
financial crisis

FED SURVEY

Rise in interest rates

16.
What is the single biggest threat facing the U.S. economic
recovery?

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

FED SURVEY
September 20, 2016
17.
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%

26.0%
25%

25.3%

25.9%

24.4%

25.5%

23.5%
24.1%

22.9%
22.1%
20.6%

20%

20.3%

22.2%
21.6%
21.1%

20.4%
18.2% 18.4%
18.6%
17.3%
16.9%
16.4%
17.4%
16.2%
17.6%
16.9%
15.1%
16.2%

19.1%

15%

15.1%
14.7%

15.3%
15.0%
14.6%

15.2%

13.6%
13.0%

CNBC Fed Survey September 20, 2016

Page 21 of 33

Sep 20

Jul 26

Aug 24

Apr 26

Jun 14

Mar 15

Jan 26

Jan 15 '16

Oct 27

Dec 15

Jul 28

Sept 16

Jun 16

Mar 17

April 28

Jan 27 '15

Oct 28

Survey Dates

Dec 16

Jul 29

Sep 16

Apr 28

Mar 18

Dec 17

Jan 28 '14

Sep 6

Oct 29

Jul 30

Apr 30

Jun 18

Mar 19

Jan 29, '13

Sep 12

Dec 11

Jul 31

Apr 24

Mar 16

Oct 31

Jan 23, '12

Sep 19

Aug 11, '11

10%

FED SURVEY
September 20, 2016
18.
Has the Federal Reserve kept interest rates low for
political reasons?
100%

FED SURVEY
April 30,

90%

84%
80%

70%

60%

50%

40%

30%

20%

10%

8%

8%

0%

Yes

CNBC Fed Survey September 20, 2016

Page 22 of 33

No

Don't know/unsure

FED SURVEY
September 20, 2016
19.
Will the election play a significant role in the Fed's
decision on interest rates this month?
100%

FED SURVEY
April 30,

90%

80%

70%

64%
60%

50%

40%

31%
30%

20%

10%

5%

0%

Yes

CNBC Fed Survey September 20, 2016

Page 23 of 33

No

Don't know/unsure

FED SURVEY
September 20, 2016
20.

How does the election factor into the Fed's decision?

FED SURVEY

0%

10%

20%

30%

40%

50%

60%

70%

April 30,
Fed will hike to help Trump

0%

Fed will not hike to help Clinton

0%

Fed will be deterred from hiking

when it otherwise would because
it doesn't want to be seen as
influencing the election

59%

31%

Other

Don't know/unsure

10%

Other:

It doesnt
Does not
FOMC is data driven
If this was a non-election year, the
Fed would not be hiking either
Fed should hold off because of policy
uncertainty but can make decisions
that way without being judged
political
Uncertainty factor for public affecting
their spending plans

CNBC Fed Survey September 20, 2016

Page 24 of 33

It doesn't
The Fed will sit tight and stay quiet.
There is no justification for raising
interest rates right now.
Election is source of uncertainty
It doesn't factor in
No impact
Fed is apolitical

FED SURVEY
September 20, 2016
21.
Please rate the members of the Federal Open Market
Committee on a scale of 0 to 10, with 0 being the most
FED10SURVEY
dovish and
being the most hawkish.
April 30,
0
Lael Brainard, Board of Governors
Charles Evans, Chicago

Daniel Tarullo, Board of Governors

3.3

Jerome Powell, Board of Governors

4.7

James Bullard, St. Louis

4.9

John Williams, San Francisco

5.0

5.3

Dennis Lockhart, Atlanta

5.4

Jeffrey Lacker, Richmond

Esther George, Kansas City

CNBC Fed Survey September 20, 2016

Page 25 of 33

5.2

Patrick Harker, Philadelphia

Loretta Mester, Cleveland

3.8

4.6

Stanley Fischer, Board of Governors

3.6

Neel Kashkari, Minneapolis

Robert Kaplan, Dallas

2.3
3.2

Eric Rosengren, Boston

1.8

Janet Yellen, Board of Governors, Chair

William Dudley, NY, Vice Chairman

5.8
7.0

8.1
8.4

10

FED SURVEY
September 20, 2016
22.
When it comes to the effect on policy for each of the
following factors, do you believe the Federal Reserve
SURVEY
pays tooFED
much
attention, pays the right amount of
April
attention,
or 30,
doesn't pay enough attention?

100%

Pays too much attention

Pays the right amount of attention

Doesn't pay enough attention

Don't know/unsure

3%
3%

5%

90%

29%

80%

37%
70%

78%

60%

50%

40%

66%

30%

58%

20%

22%

10%

0%

Latest high-frequency
data, such as the most
recent jobs or
inflation report

Intl economic and

financial
developments

CNBC Fed Survey September 20, 2016

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Market reactions to
monetary policy

FED SURVEY
September 20, 2016

What
is your
primary area of interest?
FED
SURVEY
April 30,

23.

Other
15%

Currencies
3%

Fixed
Income
13%

Economics
50%

Equities
20%

Comments:
Jim Bianco, Bianco Research: The longer the Fed goes without
hiking, the more its credibility is hurt.
Lou Brien, DRW Trading Group: Forget the Fed chatter. Look for
the Fed's description of risks in the FOMC statement. If they ditch
"diminished" and add "nearly balanced" or "balanced" they will have
moved a step closer to a rate hike. If they don't, they will have stood
still.
John Donaldson, Haverford Trust Co.: The changes in regulations
for money market funds have already resulted in > $300 billion
being shifted from prime to government funds. Wanting to avoid
further dislocations may tip a close vote to holding rates where they
are until December.
CNBC Fed Survey September 20, 2016
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FED SURVEY
September 20, 2016
Neil Dutta, Renaissance Macro Research: A consensus against
raising rates may emerge at the September FOMC meeting;
SURVEY
however, the FED
case to
keep a rate hike off the table for all of 2016 is
April 30,tenuous. Growth has picked up, financial
becoming increasingly
conditions have eased, and labor markets continue to tighten.
Neutral rates have arguably risen as well: the USD has declined, the
labor force has expanded, and fiscal policy looks set to ease.
Mike Englund, Action Economics: The Fed is afraid to be part of
the narrative, and pulls back from action each time its trial balloons
attract attention. The primary driver of a December hike for the
data-dependent Fed is the calendar, and a likely desire to tighten at
least once this year.
Robert Fry, Robert Fry Economics: Because of the theoretical and
econometric models they use, the members of the Board of
Governors simply can't conceive of the possibility that excessively
low rates can hurt the economy by reducing interest income and
forcing savers to save more to fund their future retirements. The
"wealth effect" is a temporary illusion; in the long run, higher stock,
bond, and house prices do not boost economic growth.
Dennis Gartman, The Gartman Letter: I long for the days back in
the 70s when we really didn't even know when the FOMC meetings
were held; and if we did, we certainly didn't know the attendees;
and if we knew them, we certainly didn't know whether they were
"hawks" of "doves;" and if we knew that we really never knew who
was or wasn't a "voter" in the rotation. Things were simpler and
better then as we awaited the stop-out rate on repos and/or
reverses. Now, there is chaos with the movement to excess
transparency. Don't get me wrong; transparency is good; but we've
taken this just a bit too far in my humble... and increasingly
elderly... opinion.

CNBC Fed Survey September 20, 2016

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FED SURVEY
September 20, 2016
Kevin Giddis, Raymond James Financial: The Fed's policies aren't
hampering the U.S. economy, but they aren't likely helping much
FED
SURVEY
either. The Fed
needs
to normalize rates when the data supports it...
April
30,
September, no.
December,
maybe. 2017...Why not!
Art Hogan, Wunderlich Securities: This time next year none of us
will remember what month the Fed raised rates in 2016 - it won't
matter. We need to get away from emergency levels of monetary
policy.
John Kattar, Ardent Asset Advisors: The Fed is committed to
normalizing policy in an environment that is far from normal. But
having waited for years and with the case a close one, they can wait
another few months until after the election.
Jack Kleinhenz, NRF Chief Economist: I think the latest data is
both choppy and underwhelming and thus does not provide a
compelling reason for the Fed as they interpret the data to raise
rates. Nonetheless, there is a need to move toward normalization
and I think Fed officials have tied their hands because of their "data
dependency" decision making process.
David Kotok, Cumberland Advisors: The Fed is one of the big 4
central banks. The four are out of synch with each other and
communicating poorly. Hence volatility rises and growth slows. It
doesn't appear this will change in the near future. Rocky times
ahead.

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FED SURVEY
September 20, 2016
Subodh Kumar, Subodh Kumar & Associates: Sink or swim has
historically been at the core for better prosperity. Amid stress from
FEDdiscussion
SURVEYabout relief is currently up. After eight
wars to elections,
April
years, and more
for30,
some, of in effect redistributing away from
savers, central banks appear to be in policy review, notwithstanding
their obfuscation in public. We believe change should include 25
basis points at-a-time rate increases from the Fed from September
2016. Volatility, even in supposedly stable government fixed income
has increased, most interestingly in German bunds. Currency
volatility is up in emerging markets. Major currencies like the yen
and the euro have not behaved as the authorities likely expected.
Not unlike Japan in the 1980s, China is being urged to have a "more
fair" currency. In portfolios, we would focus less on momentum and
more on quality standards. For equity markets, consensus earnings
in effect being managed ahead of reporting, lay the ground for
valuation volatility. On sink or swim and restructuring, we favor
energy. In asset mix, we favor above-average allocations to cash
and alternate assets.
Guy LeBas, Janney Montgomery Scott: The only monetary policy
transmission mechanism that seems to matter these days is the
value of the dollar.
Donald Luskin, Trend Macrolytics: God bless Lael Brainard.
Drew Matus, UBS Investment Research: We expect the next
hike in December. We continue to believe that sustained low rates
may be negatively impacting the economy.
Rob Morgan, Sethi Financial Group: Monday, September 12th
saw three Fed governors say there is no hurry to raise rates. We
won't see a rate hike next week, and probably won't see one until
after the election.

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FED SURVEY
September 20, 2016
Joel Naroff, Naroff Economic Advisors: The Fed should drop the
"data dependent" phrase as it only serves to box in the members. If
FED SURVEY
the data are strong,
everyone will know what the Fed is going to do.
April 30,
James Paulsen, Wells Capital Management: This is the first time
since serious discussion surrounding whether the Fed should tighten
that the "global bond vigilante" is back in the mix. The 10-year
sovereign bond yield has risen about the globe since early July (eg,
in Japan, Eurozone and USA) suggesting to the Fed it is time to get
in the game. Maybe now, the decision is no longer the Feds.
Perhaps, like many times in the past, the bond vigilante has finally
intervened to force the decision?
Lynn Reaser, Point Loma Nazarene University: Investors are
losing hope that central bankers can help economies, but they still
fear the possible impact of tightening.
John Roberts, Hilliard Lyons: Expect the Fed to stay on the
sidelines until after the election so they cannot be characterized as
impacting the election in any way. Recent economic statistics have
been ambiguous enough to provide the Fed cover for such inactivity.
Merrill Ross, Wunderlich: Global synchronicity, in the financial
sense, has permanently changed the way the US economy responds
to monetary stimulus and I think Dr. Bernanke is correct in his
statement that the inflation target needs to be higher because the
neutral rate is at zero.
Chris Rupkey, Bank of Tokyo-Mitsubishi: Hated to back off a
rate hike call for September. They are in a real pickle by not raising
rates earlier. They forgot they can raise rates to neutral without
slowing, better retarding, growth.

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FED SURVEY
September 20, 2016
John Ryding, RDQ Economics: The Fed may have missed the
window to normalize monetary policy by engaging in QE3 and
FED SURVEY
delaying rate hikes.
Declining profitability is a growing threat to the
expansion andApril
while30,
monetary policy won't cure this ill, the Fed is
bound to try.
Allen Sinai, Decision Economics: Looking ahead, interest rates
are too low. Inflation will be picking up; the federal funds rate
should be raised pre-emptively.
Hank Smith, Haverford Investments: It is painful and confusing
to have to listen to the barrage of speeches by Fed
presidents/governors that contradict each other. And that includes
the Vice Chair Stan Fisher. Yellen should try to get everyone on the
same page more or less.
Diane Swonk, Diane Swonk & Associates: The Fed has become a
political piata in a post-crisis economy where it has been the "only
game in town." They are bound by law to do something as the
economy falters, but have no ability or legal authority to make
elected officials do their jobs. Blaming them for the failures of our
elected officials is unproductive and could be dangerous.
Mark Vitner, Wells Fargo: When GDP growth has struggled to
average even 2 percent growth, the global economy is shaky and the
most recent month's economic data are inexplicably weak, you do
not raise interest rates!

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FED SURVEY
September 20, 2016
Mark Zandi, Moody's Analytics: I think the Fed will make a
mistake if it doesn't raise rates by 25 bps (this) week, which seems
SURVEY
likely. The jobFED
market
is strong and very close to full employment,
April
30, and set to accelerate, financial markets are
inflation is close
to target
in good shape and the global economy is stable. They have a window
to raise rates, and they should go through it. If they try and wait
until December, which is the next logical time to raise rates, there is
a good chance they will have to delay again given what is simply
typical volatility in financial markets. Risks are also rising that they
move too slowly and we get into a classic business cycle as they play
catch up to cool an overheating economy.

CNBC Fed Survey September 20, 2016

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