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FED SURVEY

June 14, 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 June 9-11, 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 June meeting, the Federal Reserve will:


0%

10%

Raise interest rates

0%

Lower interest rates

0%

20%

0%

CNBC Fed Survey June 14, 2016


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40%

50%

60%

70%

80%

90%

100%

100%

Keep rates unchanged

Don't know/unsure

30%

FED SURVEY
June 14, 2016

(For those answering rates would be kept unchanged at the


June meeting) What is the main reason the Fed will keep
FED SURVEY
rates unchanged
at its June meeting?
0%
20%
30%
40%
50%
April 30, 10%
Weak May jobs
report

50%

Uncertainty
surrounding
Brexit vote

13%

Global growth
concerns

15%

Markets
unprepared for
rate hike

5%

Other

Don't
know/unsure

18%

0%

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

CNBC Fed Survey June 14, 2016


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Were prepping the market for a July


hike prior to the May employment
report
Yellen foot-dragging

60%

FED SURVEY
June 14, 2016

After this months meeting, the Federal Reserve's next


move will most likely be:

FED SURVEY
April 30,

Jan 27
0%

Mar 15
20%

Apr 26
40%

Jun 14
60%

80%

88%
90%

Raise interest rates

94%
95%

10%
Lower interest rates

10%
4%
3%

0%
Move to negative interest rates

0%
0%
0%

3%
Launch new quantitative easing

0%
2%
3%

CNBC Fed Survey June 14, 2016


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100%

FED SURVEY
June 14, 2016

When will the Federal Reserve make its next move?

FED SURVEY

AprilMarch
30, 15 Survey
Jan 27 Survey
For
those
who
said:

Raise
interest
rates
(88%)

Lower
interest
rates
(10%)

Move to
negative
interest
rates
(0%)

Launch
new
quant.
easing
(3%)

Average
month:

For
those
who
said:

May
2016

Raise
interest
rates
(90%)

August
2016

Lower
interest
rates
(10%)

--

Move to
negative
interest
rates
(0%)

April
2016

Launch
new
quant.
easing
(0%)

Average
month:

For
those
who
said:

June
2016

Raise
interest
rates
(94%)

October
2016

Lower
interest
rates
(4%)

--

Move to
negative
interest
rates
(0%)

--

Launch
new
quant.
easing
(2%)

CNBC Fed Survey June 14, 2016


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April 26 Survey

June 14 Survey

Average
month:

For
those
who
said:

Average
month:

August
2016

Raise
interest
rates
(95%)

Sept
2016

Sept
2016

Lower
interest
rates
(3%)

October
2016

--

Move to
negative
interest
rates
(0%)

--

Dec
2016

Launch
new
quant.
easing
(3%)

March
2017

FED SURVEY
June 14, 2016

2. How many times will the Federal Reserve hike rates this
year (2016)?

FED SURVEY

5.00

April 30,

4.50

4.00

3.50

2.8

3.00

2.50

2.1
1.9

2.00

1.6

1.5

Apr 26

Jun 14

1.50

1.00

0.50

0.00

Dec 15 '15

Jan 26 '16

Mar 15
Survey Dates

CNBC Fed Survey June 14, 2016


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FED SURVEY
June 14, 2016

3. The current presidential campaign is:


Mar 15

FED SURVEY

Apr 26

Jun 14

April 30,

70%

61%
60%

56%

58%

50%

39%

40%

40%
37%

30%

20%

10%

5%
2%

3%

0%

Positive for the


economic outlook

Negative for the


economic outlook

CNBC Fed Survey June 14, 2016


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Having no effect on
the economic outlook

FED SURVEY
June 14, 2016

4. Which would be the best presidential election outcome


for the economy?

FED SURVEY
A Democrat wins
April 30,

Doesn't matter

A Republican wins
Don't know/unsure

45%

40%

40%
37%

Republican Wins

35%
35%

Doesn't matter

30%

26%

30%

25%

24%
20%

18%

15%

16%

28%

23%

Democrat wins

15%
Don't know/unsure

10%

9%
5%

0%

Mar 15

CNBC Fed Survey June 14, 2016


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Apr 26

Jun 14

FED SURVEY
June 14, 2016

5. Which candidate has best economic policies?


60%

FED SURVEY
April 30,

50%

45%

40%

30%

30%
25%

20%

10%

0%

Clinton

CNBC Fed Survey June 14, 2016


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Trump

Don't know/unsure

FED SURVEY
June 14, 2016

Which candidate would be best for the stock market?

FED SURVEY
60%

April 30,

50%

40%

38%

38%

30%

25%

20%

10%

0%

Clinton

CNBC Fed Survey June 14, 2016


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Trump

Don't know/unsure

FED SURVEY
June 14, 2016

6. Who is most likely to win this year's presidential


election?

FED SURVEY

90%

80%

April 30,
80%

Apr 26

Jun 14

80%

70%

60%

50%

40%

30%

20%
13%

15%

10%

7%

5%

0%
Clinton

CNBC Fed Survey June 14, 2016


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Trump

Don't know/unsure

FED SURVEY
June 14, 2016

In the wake of the November presidential election,


protectionist trade policies ...

FED
0% SURVEY
10%
April 30,

Will be
enacted
regardless of
who wins

20%

30%

40%

53%

Will be
enacted only
if Donald
Trump wins

Don't
know/unsure

33%

0%

3%

CNBC Fed Survey June 14, 2016


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60%

13%

Won't be
enacted
regardless of
who wins

Will be
enacted only
if Hillary
Clinton wins

50%

FED SURVEY
June 14, 2016

7. 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

2,300

2296

2,250

2247

2293
2254

2259

2234

2223

2244

2200

2,200

2166

2,150

2158

2159

2114
2088

2140

2,100

2149

2107
2035

2,050

2,000

2000
1,950

1,900

1,850

1,800
Dec
16

Jan
27
'15

Mar April Jun


17
28
16

CNBC Fed Survey June 14, 2016


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Jul
28

Sept
16

Oct
27

Survey Dates

Dec
15

Jan
15
'16

Jan
26

Mar
15

Apr
26

Jun
14

FED SURVEY
June 14, 2016

8. 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%

3.04%

2.88%
2.89%

2.88%

2.83%

2.67% 2.67%
2.58%
2.54%

2.5%
2.51%

2.34%

2.11% 2.10%

2.0%
Dec
16

Jan
27
'15

Mar
17

April Jul 16Jul 28 Sept


28
16

Oct
27

Survey Dates

CNBC Fed Survey June 14, 2016


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Dec
15

Jan
26
'16

Mar
15

Apr
26

Jun
14

FED SURVEY
June 14, 2016

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


?

FED SURVEY Dec 31, 2017

Dec 31, 2016

Dec 31, 2018

April 30,

2.5%

2.17%

2.13%
1.99%

2.0%

2.04%

2.07%

1.93%
1.84%

1.75%

1.61% 1.62%

1.56%

1.5%

1.61%

1.60%
1.49%

1.41%
1.46%

1.43%
1.17%

1.0%

1.12%
0.88%
0.91% 0.90%
0.85%

0.78%
0.84%
0.74%

0.5%

0.0%

CNBC Fed Survey June 14, 2016


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FED SURVEY
June 14, 2016

10.
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%
2.98%

3.0%

2.73%

2.85% 2.79%

2.65%

2.69%
2.65%
2.58%

2.5%

2.0%

Survey Dates

CNBC Fed Survey June 14, 2016


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2.64%
2.56%

FED SURVEY
June 14, 2016

11.
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

Mar 15 survey

Q3 2018

Apr 26 survey

Q4 2018

Jun 14 survey

Q4 2018

CNBC Fed Survey June 14, 2016


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FED SURVEY
June 14, 2016

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

FED SURVEY
April 30,

2016

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%

+2.25%

+2.31%

2.2%

+2.17%

+2.21%
+2.14%

+2.05%

2.0%
+1.95%

1.8%

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

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

CNBC Fed Survey June 14, 2016


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+2.43% +2.31% +2.41% +2.21% +2.25%

FED SURVEY
June 14, 2016

13.
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%
2.24%

2.20%

2.17%

2.2% 2.17%
2.07%2.08%

2.12%

2.13%
2.07%

2.0%
1.89%

1.96%

1.88%
1.75%

1.8%
1.75%

1.72%
1.66%

1.6%

1.50%
1.4%

1.2%

1.0%
Dec
16

Jan
27,
'15

Mar
17

April
28

Jun Jul 28 Sept


16
16

Oct
27

Survey Dates

CNBC Fed Survey June 14, 2016


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Dec
15

Jan
26
'16

Mar
15

Apr
26

Jun
14

FED SURVEY
June 14, 2016

14.
When do you expect the Fed to allow its balance
sheet to decline?

FED
0% SURVEY
10%
20%
April 30,

Jun '16

0%

Jul '16

0%

Aug '16

0%

Sep '16

0%

Nov '16

0%

Dec '16

8%
3%
5%
63%
5%

CNBC Fed Survey June 14, 2016


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70%

0%

After May '17


Never

60%

10%

Mar '17

May '17

50%

5%

Jan '17

Apr '17

40%

3%

Oct '16

Feb '17

30%

FED SURVEY
June 14, 2016

15.
What is the single biggest threat facing the U.S.
economic recovery?

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%

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

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%
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%
2%
4%
3%
2%
0%
0%
0%
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%
5%
0%
25%

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

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

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

3%
0%
0%
0%
0%

3%
7%
5%

13%

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%

Other responses:

Fear itself
Inadequate monetary stimulus as
reflected in weak nominal GDP
growth

CNBC Fed Survey June 14, 2016


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Squeezed profit margins


Slow global growth due to slower
productivity/lab force growth

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

Geopolitical risks

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
Mar 15
Apr 26
Jun 14

European recession/
financial crisis

April 30,

Rise in interest rates

FED SURVEY

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%

FED SURVEY
June 14, 2016

16.
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%

25.9%

24.4%
23.5%

25.5%
22.9%

24.1%

22.1%

20%

20.6%
20.3%

20.4%
18.2%

19.1%
17.6%

21.1%
18.4%

18.6%

17.3%
16.9%
16.2%

16.4%

15.1%
16.9%
16.2%
15.3%
15.2%
15.0%
14.6%

15%

17.4%

15.1%
14.7%

13.6%
13.0%

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
April 28
Jun 16
Jul 28
Sept 16
Oct 27
Dec 15
Jan 15 '16
Jan 26
Mar 15
Apr 26
Jun 14

10%

Survey Dates

CNBC Fed Survey June 14, 2016


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FED SURVEY
June 14, 2016

17.
Which of the following is the best explanation of the
weak May jobs report?

FED SURVEY

60%

April 30,
55%

50%

40%

35%

30%

20%

10%

10%

0%

Statistical blip not


Beginning of a trend
reflective of the trend of lower job growth

CNBC Fed Survey June 14, 2016


Page 22 of 34

Don't know/unsure

FED SURVEY
June 14, 2016

18.
Which of the following factors do you believe is
depressing job growth now? (Select all that apply)

FED SURVEY
April 30,

0%

10%

20%

30%

40%

50%

Employers uncertain about future


growth

70%

58%

Economy at full employment

40%

Higher minimum wages

28%

Other

28%

Productivity beginning to rise

15%

Election uncertainty

Don't know/unsure

60%

13%

0%

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 minirecession
Current/anticipated aggregate
demand does not support adding
meaningful numbers of new

CNBC Fed Survey June 14, 2016


Page 23 of 34

employees and hiking wages. Labor


market is not tight.
Lack of warm qualified bodies
Lower commodity prices
Rise of automation destroying many
jobs
Skills mismatch as well as normal
slowdown after rapid growth past 6
years
Weak foreign growth

FED SURVEY
June 14, 2016

19.
Relative to an economy operating at full capacity,
what best describes your view of the amount of resource
SURVEY
slack in FED
the U.S.
right now for labor?
80%
April 30,
70%
Modestly more slack

60%

50%

40%

Considerably more slack

30%
Modestly less slack

20%
Considerably less slack

10%

0%

No difference

Jul 29
Jan 27
Aug 20 Sep 16 Oct 28 Dec 16
14
'15

Mar
Jun 14
Apr 28 Jun 16 Jul 28
17
'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%

CNBC Fed Survey June 14, 2016


Page 24 of 34

FED SURVEY
June 14, 2016

Relative to an economy operating at full capacity, what best


describes your view of the amount of resource slack in the
FED
U.S. right now
forSURVEY
production capacity?
70%
April 30,
Modestly more slack

60%

50%

40%

30%

Considerably more slack

Modestly less slack

20%
No difference

10%

Considerably less slack

0%

Jul 29
Jan 27
Aug 20 Sep 16 Oct 28 Dec 16
'14
'15

Mar
Jun 14
Apr 28 Jun 16 Jul 28
17
'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%

CNBC Fed Survey June 14, 2016


Page 25 of 34

FED SURVEY
June 14, 2016

20.
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?
Pays too much attention
100%

Pays the right amount of attention

5%

10%

Doesn't pay enough attention

8%

90%

23%

80%

45%

70%

50%
60%

50%

40%

70%
30%

50%
40%

20%

10%

0%

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

Intl economic and


financial
developments

CNBC Fed Survey June 14, 2016


Page 26 of 34

Market reactions to
monetary policy

FED SURVEY
June 14, 2016

21.
When it comes to comparing the effect on policy
between now and 10 years ago for each of the following
SURVEY
factors, FED
do you
believe the Federal Reserve pays more
April
30,
attention
now,
the same amount of attention, or less
attention now?
Pays more attention now
100%

Pays the same amount of attention now

Pass less attention now

3%

5%

90%

25%

20%

75%

78%

Intl economic and


financial
developments

Market reactions to
monetary policy

80%

43%
70%

60%

50%

40%

30%

53%
20%

10%

0%

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

CNBC Fed Survey June 14, 2016


Page 27 of 34

FED SURVEY
June 14, 2016
22.

What is your primary area of interest?

FED SURVEY
April 30,

Other
20%
Currencies
0%
Fixed
Income
10%

Economics
51%

Equities
20%

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 voicing
anticipatory opinions about future Fed actions before all the
economic data is reported in front of a pending Fed meeting.
Continuing such conduct could eventually jeopardize the credibility of
the 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 the
end of the EU/Euro and a dangerous rise in protectionist policies.

CNBC Fed Survey June 14, 2016


Page 28 of 34

FED SURVEY
June 14, 2016

Peter Boockvar, The Lindsey Group: The Fed has so bungled


their exit from this extraordinary experiment that they better hope
SURVEYprices is just a blip because if it's for
the recent riseFED
in commodity
April
30,
real at the same
time
services inflation stays high, they are in deep
s**t.
Robert Brusca, Fact and Opinion Economics: The Feds problem
is it tracks the economy using the WRONG paradigm. It is as though
the US economy has been TRANSFORMED into a SMALL OPEN
economy and is a price taker in world markets rather than a large
somewhat Open economy as in the past. This means that the US
does not set global wages and prices, let alone its own. They are set
in foreign markets. That makes US macro statistics less important to
actual US economic outcomes and the value of the dollar much
MORE important. The Fed's usage or framing of policy as focused on
labor and wages in a highly Keynesian framework is quaint. The Fed
needs to THINK MORE about why certain policies do not work and
why the Phillips curve seems to have evaporated instead of making
policy like everything is still the same. It isn't. International markets
and events are much more important than the Fed seems to
recognize or to admit.
John Donaldson, Haverford Trust Co.: When you look at the
detail in the jobs report, the weakness is concentrated in oil & gas,
mining, and the support activities for those industries. That support
category has been particularly weak in spring months where the
historical 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. The
latest payroll figures lower the sense of urgency to hike in July. That
said, the rationale for gradual rate hikes remains strong and our
sense is the market has a tough time between the notions of slow
hikes versus no hikes. Wage growth has picked up and the
stabilization in the USD has helped the outlook for core inflation.
CNBC Fed Survey June 14, 2016
Page 29 of 34

FED SURVEY
June 14, 2016

Mike Englund, Action Economics: The May payroll undershoot


partly reflected a Verizon and weather hit that will be reversed in
FED SURVEY
June, hence setting
up the fed for a July rate hike. Yet, it's
April
unfortunate that
the30,
Fed has talked itself into a spot where it needs
to fit policy changes around data wiggles.
Robert Fry, Robert Fry Economics: The Fed should stop putting
so much weight on a single measure, the increase in nonfarm
payrolls. If you look at a broader sample of data (April personal
consumption 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 a
difficult position. U.S. economic growth and inflation is moderating
enough to consider raising rates, but not enough to garner enough
support within its ranks or convince the market that doing so is
prudent. 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 raise
rates this year and that economic data is mixed at best. We are in a
far better place today than we were this time last year.
John Kattar, Ardent Asset Advisors: There is absolutely no
reason for the Fed to do anything prior to the election. Economic
data is tepid, inflation is subdued, and geopolitical risks such as
Brexit loom.
Jack Kleinhenz, NRF Chief Economist: The pace of a Fed policy
change and inflation are uncertain. Recent economic data has in
general been positive but solid economic data is required for a Fed
hike in July. The weak May employment report and Brexit are issues
affecting the near-term decision and later this year the presidential
election will influence a late 2016 decision.
CNBC Fed Survey June 14, 2016
Page 30 of 34

FED SURVEY
June 14, 2016

Subodh Kumar, Subodh Kumar & Associates: For endeavors,


checks and balances work best to curb excess, including in capital
markets in theFED
past SURVEY
in their relationship with central banks. Being
April
30,
overly enmeshed
into
following central banks can be seen again in
the capital market reactions to recent musing by the Federal Reserve
Chairman that interest rate increases need to take into account the
economy. Currently, with apparently close to $10 trillion dollars of
subzero sovereign debt having been issued worldwide and corporate
share buybacks in the United States at least running at record levels
for several quarters, of concern to investors should be that such
coopting builds in risks that appear not clearly understood. Assuming
steady state low risk seems to be a less preferable option for
portfolios to diversifying across asset classes including cash and
precious metals as well as focusing on quality.
Guy LeBas, Janney Montgomery Scott: While a June rate hike
wasn't a given, the May jobs report essentially took the option off
the table. While the number was a surprise, the reaction shouldn't
be. The dollar has stopped rising and the stress fractures in China's
currency peg have dissipated, which, ironically, gives FOMC
policymakers a little more room to hike exactly when the domestic
economic data is warning that they perhaps shouldn't.
Donald Luskin, Trend Macrolytics: The Fed is so out of control it
is destroying business confidence. They say they are "data
dependent" but they come off like data junkies who flip-flop every
time some news release comes out. It's embarrassing.
Thom Melcher, PNC Asset Management Group: US economic
conditions are stable and modestly improving. Valuations are fair
given the pace of growth. The Fed's next move will be to tighten,
but they are not in a rush to do so.

CNBC Fed Survey June 14, 2016


Page 31 of 34

FED SURVEY
June 14, 2016

Rob Morgan, Sethi Financial Group: The weak May jobs report
takes a Fed hike off the table for the near term, and given the Fed's
propensity to FED
leave SURVEY
rates unchanged near a presidential election, we
April
30,
won't see a hike
until
December at the earliest.
Joel Naroff, Naroff Economic Advisors: The Fed needs to stop
paying so close attention to current data and might even stop
indicating that they are data driven, as it too often refers to current
data.
James Paulsen, Wells Capital Management: Currently, yield
structures that are nearing zero or below about the world are
becoming the biggest fear generator for private economic players
and investors. Perhaps more than ever, the Fed could have more
positive influence on private sector players' confidence by showing
some real world economic leadership and following through with a
rate increase in July.
Lynn Reaser, Point Loma Nazarene University: "Data
dependent" policy can only work if current data is a good predictor of
the future. Unfortunately, it is not. The economy's performance in
six months may look nothing like today's data, which means that
monetary policy, which acts with a lag, may be significantly off
course.
John Roberts, Hilliard Lyons: Continued high levels of negative
campaigning between the two major party candidates are unlikely to
be positive for the markets. Hopefully we will get some more
positive rhetoric and specific policy proposals from the minor party
candidates!
Merrill Ross, Wunderlich: We still have to consider that sluggish
growth and the potential for deflation could be symptomatic of
secular and demographic changes that are very difficult to overcome,
and far beyond the influence of monetary policy.
CNBC Fed Survey June 14, 2016
Page 32 of 34

FED SURVEY
June 14, 2016

Chris Rupkey, Bank of Tokyo-Mitsubishi: Fed reluctance to lift


rates back to normal is making companies, individuals and investors
FED SURVEY
and traders believe
falsely that they cannot raise interest rates or it
April
30,
will "break" the
economy.
The Fed's zero rate policy has cost savers
billions in lost real wealth. Bring back Greenspan, not sure why we
threw his measured pace rates normalization under the bus. Yellen
voted for his rate hikes, now she won't.
John Ryding, RDQ Economics: The Fed has consistently
overreacted to the latest payroll print (e.g. September 2013 and
September 2015). In addition, the Fed has paid too much attention
to short-term market volatility. Communication is unclear (data
dependent but which data?) The Fed needs to rethink and clarify the
basis for policy decisions. Right now policy moves are very much in
the discretionary mode of operation.
Allen Sinai, Decision Economics: The U.S. economy is in a new
phase of the business cycle: tight labor markets and the beginning of
wage-price pickup.
Hank Smith, Haverford Investments: The next president will
have an easy opportunity to accelerate GDP growth through
corporate tax reform (where there is bipartisan support) and
regulatory reform. Lets hope they see the light!
Diane Swonk, Diane Swonk & Associates: The push to inhibit
trade, close boarders, and up regulation across a board swath of
industries are all a threat to growth in 2017. The only policy offset is
the 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 helicopter
drop, which could be its last move as an independent central bank if
it were to occur.

CNBC Fed Survey June 14, 2016


Page 33 of 34

FED SURVEY
June 14, 2016

Peter Tanous, Lynx Investment Advisory: Biggest concern is the


rising number of jobs disappearing due to automation. The case for a
FED SURVEY
guaranteed income
is getting more interesting.
April 30,
Mark Vitner, Wells Fargo: Financial market volatility will increase
ahead of ANY meeting that the markets sense that the Fed is set to
raise interest rates. The Fed needs to reset their expectations in
regards to this.
Scott Wren, Wells Fargo Investment Institute: Investors are
already looking ahead to improved economic and earnings growth in
the second half of this year and in 2017. That is why we are only a
whisper away from the all-time record high in the S&P 500. When
the current consolidation phase ends for the SPX we look for the
index to move higher and set new record highs in the second half of
the year. It might not break through the May '15 intraday record
high the first 2 or 3 times it tries but we are convinced it will. We
want our clients to stay invested and use downside volatility as a
buying opportunity. Good, not great, equity returns over the next
12-18 months.
Clare Zempel, Zempel Strategic: The failure of central banks
worldwide to spur faster nominal growth, which reflects an
unimaginative and misdirected focus on low interest rates, has
tragically suppressed growth in incomes and fomented a xenophobic
political shift.

CNBC Fed Survey June 14, 2016


Page 34 of 34