CNBC Fed Survey: Special ECB Edition June 4, 2014

Page 1 of 13
FED SURVEY: Special ECB Edition
June 4, 2014

These survey results represent the opinions of 30 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 May 30-June 2, 2014. 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. Which actions, if any, do you expect the ECB to take at its
meeting on June 5? (You may select more than one
response.)

Other responses:
Hint at QE
Conditional LTRO, possible end to SMP
sterilisation
These measures still are not adequate
Why the need to do anything tangible
when rhetoric has worked so well?
66%
55%
52%
31% 31%
14%
0%
10%
20%
30%
40%
50%
60%
70%
Signal rates
will remain
low for a
long time
Reduce
refinancing
rate
Reduce
deposit rate
Long-term
refinancing
operation
Quantitative
easing
Other


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

Average refinancing rate: 0.11 %

Average deposit rate: - 0.10 %

Average: $1.30 per euro
Avg. euro zone GDP: 1.11 %

Avg. euro zone inflation: 0.73 %

2. What refinancing/deposit rate do you expect the ECB to set
at the June 5 meeting?








3-4.What is your forecast for euro zone GDP and inflation
year-over-year percentage change (2014 vs 2013)?










5. What is your year-end forecast for the euro?










CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

6. What percent do you ascribe to each of these factors to
explain the recent decline in the yield on the 10-year U.S.
Treasury note?

Other:
Earnings uncertainty
Euro zone deflation or
disinflation
Global disinflation
Ten-year yield is as low as it
will be
Two major factors keeping
U.S. Treasury yields low:
1) QE tailwind becomes a
headwind - removing an
important inflation driver 2)
U.S. Treasury bonds have a
high relative value compared
with other sovereign debt
options in a low inflationary
global marketplace
US Treasuries look cheap
compared to other developed
sovereign debt
The narrowing of the deficit
and shortfall in new Treasury
bond issuances relative to
expectations
Federal Reserve's statements
that interest rates will remain
below historically "normal"
rates for some time
30% reduced supply of U.S.
treasuries as federal deficit
shrinks; 20% momentum and
the voodoo of chart readers
Correction from oversold
condition on bonds late last
year and some rebalancing
from stocks to bonds because
of the huge stock rally the
past two years
The bond market is telling us
that U.S. growth is going to
be very modest. The Fed and
consensus are too optimistic.
Stronger bank purchases of
U.S. Treasuries due to stiffer
liquidity rules implemented
at the start of the year
26%
21%
19%
18%
9%
8%
0%
5%
10%
15%
20%
25%
30%
Flight to
safety
Lower
expectations
for U.S.
growth
Other Lower
expectations
for U.S.
inflation
Expected
actions by
the ECB
Lagged
effects of QE
by the Fed


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

7. Do you expect the Federal Reserve will ever allow its
balance sheet to decline, either by selling assets or
allowing securities it holds to roll off?


91%
4% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Yes No Don't know/unsure


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

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

Note: In the April survey, the question was phrased as: When do you believe the Fed will begin
reducing the size of its balance sheet?

0%
5%
10%
15%
20%
25%
30%
O
c
t
N
o
v
D
e
c
J
a
n

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1
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F
e
b
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a
r
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p
r
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a
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u
n
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u
l
A
u
g
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e
p
O
c
t
N
o
v
D
e
c
J
a
n

'
1
6
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
J
u
l
A
u
g
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n

'
1
7
A
f
t
e
r

J
a
n

28-Apr 4-Jun
Averages:

April 28 survey:
October 2015

June 4 survey:
March 2016




CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

8. When do you think the FOMC will first increase the fed
funds rate?



0%
5%
10%
15%
20%
25%
Averages:

April 28 survey:
July 2015

June 4 survey:
August 2015


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

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

1.78%
2.02%
0%
1%
2%
3%
4%
5%
2014 vs 2013 2015 vs 2014


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

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


1723
1751
1709
1752
1816
1814
1844
1866
1883
1930
1857
1913
1924
1937
1956
2017
2029
1,500
1,600
1,700
1,800
1,900
2,000
2,100
Jun 18
'13
Jul 30 Sep 6 Sep 30 Oct 29 Dec 17 Jan 28
'14
Mar 18 Apr 28 Jun 4
Survey Dates
June 30, 2014 December 31, 2014 June 30, 2015


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

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


2.80%
3.10%
3.33%
3.39%
3.00%
3.18%
3.08%
2.95%
2.89%
2.53%
3.44%
3.37%
3.32%
3.21%
2.90%
3.54%
3.24%
2.0%
2.5%
3.0%
3.5%
4.0%
Jun 18
'13
Jul 30 Sep 6 Sep 30 Oct 29 Dec 17 Jan 28
'14
Mar 18 Apr 28 Jun 4
Survey Dates
June 30, 2014 December 31, 2014 June 30, 2015


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

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



Jan
29,
'13
Mar
19
Apr
30
Jun
18
Jul 30
Sep
17
Oct
29
Dec
17
Jan
28,
'14
Mar
18
Apr
28
Jun 4
2014 +2.56 +2.60 +2.62 +2.56 +2.52 +2.63 +2.53 +2.62 +2.77 +2.78 +2.75 +2.33
2015 +2.90 +3.02 +3.00 +2.81
+2.56%
+2.60%
+2.62%
+2.56%
+2.52%
+2.63%
+2.53%
+2.62%
+2.77% +2.78%
+2.75%
+2.33%
+2.90%
+3.02%
+3.00%
+2.81%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2014 2015


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

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


Jul 31
Jun
18
Jul 30 Sep 6
Sep
17
Oct
29
Dec
17
Jan
28 '14
Mar
18
Apr
28
Jun 4
June 30, 2014 0.20% 0.18% 0.16% 0.14% 0.13% 0.14% 0.16% 0.13% 0.17% 0.12%
Dec 31, 2014 0.28% 0.21% 0.21% 0.20% 0.19% 0.15% 0.27% 0.17%
Dec 31, 2015 0.97% 0.92% 0.82% 0.70% 0.72% 0.83% 0.99% 0.68%
0.20%
0.18%
0.16%
0.14%
0.13%
0.14%
0.16%
0.13%
0.17%
0.12%
0.28%
0.21%
0.21%
0.20%
0.19%
0.15%
0.27%
0.17%
0.97%
0.92%
0.82%
0.70%
0.72%
0.83%
0.99%
0.68%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014


14. What is your primary area of interest?



Comments:

Lynn Reaser, Point Loma Nazarene University: Monetary policy
is approaching a critical split in the road as the ECB shifts to more
ease, the Fed begins to tighten, and the BOJ maintains its current
stance.

John Kattar, Ardent Asset Advisors: Over the past 100 years or
so, the Fed has increased its balance sheet by just over 7% per year
(using adjusted monetary base from the St. Louis Fed as a proxy).
Given the size of the current balance sheet, that would equate to
over $300 billion per year and $25 billion per month of growth,
whether it's called QE or not. Although I expect QE to end in the fall,
I think it will revert to something like $25 billion per month
sometime in 2015.

Economics
50%
Equities
25%
Fixed Income
4%
Currencies
0%
Other
21%


CNBC Fed Survey: Special ECB Edition June 4, 2014
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FED SURVEY: Special ECB Edition
June 4, 2014

Subodh Kumar, Subodh Kumar & Associates: Central banks
need to avoid augmenting sense of dependency in the markets of
relief from risk by monetary action. With the history of state
intervention in Europe, this is a particular risk of QE for the ECB. It
needs also to get the euro rate lower in order to boost poor growth.
This mix augurs for volatility to rise in global markets.

William Larkin, Cabot Money Management: Deflationary factors
today are being generated from surplus capacity across the globe,
which is keeping interest rates lower longer than a rational investor
might have expected. This is a factor of the inter-connectivity of our
worldwide financial and economic systems.

Joel Naroff, Naroff Economic Advisors: The major issue facing
the Fed is: can businesses hold down pay increases once full
employment is approached? Since that should be by early 2015, the
uncertainty will likely cause Fed officials to start raising the specter
of higher rates by year's end.

Diane Swonk, Mesirow Financial: Markets are underestimating
the impact of falling deficits on Treasury bond yields. The shortfall in
supply is quite substantial, especially in a world where Putin has
shown his hubris.

Allen Sinai, Decision Economics: This will probably be the second
longest postwar economic expansion and nearly the best equity bull
market since World War II.