# CNBC Fed Survey – October 28, 2014

Page 1 of 31

FED SURVEY
October 28, 2014
These survey results represent the opinions of 39 of the nation’s top money managers, investment
strategists, and professional economists.

They responded to CNBC’s invitation to participate in our online survey. Their responses were collected
on October 23-24, 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. By how much do you believe the Fed will, on net, increase or
decrease the size of its balance sheet in 2015?

-\$104
-\$146
\$24
\$60
-\$83
-\$54
-\$200
-\$150
-\$100
-\$50
\$0
\$50
\$100
B
i
l
l
i
o
n
s

Mar 18 Apr 28 Jul 29 Aug 20 Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
2. Will the Federal Reserve vote in October to end its QE program?

95%
5%
0%
97%
3%
0%
0%
20%
40%
60%
80%
100%
120%
Yes No Don't know/unsure
Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
3. What is the probability the Fed will begin a new QE program in
the 12 months after it concludes the current QE program?
(0%=No chance of new QE, 100%=Certainty of new QE)

0%
10%
20%
30%
40%
50%
60%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Chance of new QE
Sep 16 Oct 28
Averages:

Sep 16:
10.0%

October 28:
14.4%

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
What is the probability the Fed will begin a new QE program in the
two years after it concludes the current QE program?
(0%=No chance of new QE, 100%=Certainty of new QE)

0%
10%
20%
30%
40%
50%
60%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Chance of new QE
Sep 16 Oct 28
Averages:

Sep 16:
14.0%

Oct 28:
18.4%

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
4. The Fed will remove the phrase “considerable time” from its
monetary policy statement in ...

41%
24% 24%
11%
0%
23%
41%
13%
21%
3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
September October December After
December
January After January Don't
know/unsure
Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
5. Which of these is the bigger risk to your forecasts for Fed policy
in 2014?

26% 26%
40%
9%
31%
22%
47%
0%
40%
16%
40%
5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Fed will be more
dovish than I
expect
Fed will be more
hawkish than I
expect
Risks are balanced Don't know/unsure
Jul 29 Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
Which of these is the bigger risk to your forecasts for Fed policy in
2015?

49%
34%
14%
3%
53%
39%
8%
0%
64%
13%
21%
3%
0%
10%
20%
30%
40%
50%
60%
70%
Fed will be more
dovish than I
expect
Fed will be more
hawkish than I
expect
Risks are balanced Don't know/unsure
Jul 29 Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
6. 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%
36%
4%
8%
4%
0%
34%
40%
6%
11%
9%
0%
20%
60%
3%
6%
9%
3%
18%
69%
0%
5%
8%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Considerably more slack now
Modestly more slack now
No difference
Modestly less slack now
Considerably less slack now
Don't know/unsure
July 29 August 20 Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
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?

12%
56%
8%
16%
4%
4%
9%
60%
14%
9%
9%
0%
8%
64%
8%
14%
3%
3%
8%
64%
15%
8%
5%
0%
0% 10% 20% 30% 40% 50% 60% 70%
Considerably more slack now
Modestly more slack now
No difference
Modestly less slack now
Considerably less slack now
Don't know/unsure
July 29 August 20 Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
7. Where do you expect the S&P 500 stock index will be on … ?

1857
1913
1924
1937
1956
2000
2032
1999
2017
2029
2053
2109
2066
2075
2149
2111
1,800
1,850
1,900
1,950
2,000
2,050
2,100
2,150
2,200
Dec 17 Jan 28
'14
Mar 18 Apr 28 Jun 4 July 29 Sep 16 Oct 28
Survey Dates
December 31, 2014 June 30, 2015 December 31, 2015

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
8. What do you expect the yield on the 10-year Treasury note will
be on … ?

3.44%
3.37%
3.32%
3.21%
2.90%
2.83%
2.76%
2.49%
3.54%
3.24%
3.15% 3.16%
2.90%
3.43%
3.45%
3.19%
2.0%
2.5%
3.0%
3.5%
4.0%
Dec 17 Jan 28
'14
Mar 18 Apr 28 Jun 4 Jul 29 Sep 16 Oct 28
Survey Dates
December 31, 2014 June 30, 2015 December 31, 2015

CNBC Fed Survey – October 28, 2014
Page 12 of 31

FED SURVEY
October 28, 2014
9. 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
Jul
29
Sep
16
Oct
28
2014 +2.5 +2.6 +2.6 +2.5 +2.5 +2.6 +2.5 +2.6 +2.7 +2.7 +2.7 +2.3 +1.8 +2.2 +2.2
2015 +2.9 +3.0 +3.0 +2.8 +2.7 +2.9 +2.9
+2.56%
+2.60%
+2.62%
+2.56%
+2.52%
+2.63%
+2.53%
+2.62%
+2.77%
+2.78%
+2.75%
+2.33%
+1.89%
+2.26%
+2.28%
+2.90%
+3.02%
+3.00%
+2.81%
+2.75%
+2.90% +2.90%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2014 2015

CNBC Fed Survey – October 28, 2014
Page 13 of 31

FED SURVEY
October 28, 2014
10. What is your forecast for the year-over-year percentage
change in the headline U.S. CPI for …?

1.78%
2.02%
1.99%
1.77%
2.02%
2.29%
2.27%
2.01%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
Jun 4 Jul 29 Sep 16 Oct 28
Survey Dates
2014 2015

CNBC Fed Survey – October 28, 2014
Page 14 of 31

FED SURVEY
October 28, 2014
11. 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%
35%
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Apr 28 Jun 4 Jul 29 Sep 16 Oct 28
Averages:
April 28 survey:
October 2015

June 4 survey:
March 2016

June 29 survey:
December 2015

Sept. 16 survey:
December 2015

Oct. 28 survey:
January 2016

CNBC Fed Survey – October 28, 2014
Page 15 of 31

FED SURVEY
October 28, 2014
12. When do you think the FOMC will first increase the fed funds
rate?

0%
10%
20%
30%
40%
50%
60%
April 28 Jun 4 Jun 29 Aug 20 Sep 16 Oct 28
Averages:
April 28 survey:
July 2015

June 4 survey:
August 2015

July 29 survey:
August 2015

Aug 20 survey:
July 2015

Sep 16 survey:
June 2015

Oct 28 survey:
July 2015

CNBC Fed Survey – October 28, 2014
Page 16 of 31

FED SURVEY
October 28, 2014
13. How would you characterize the Fed's current monetary
policy?

28%
49%
46%
49%
44%
43% 43%
49%
43%
49%
17%
6%
3% 3%
3%
13%
3% 3%
6%
5%
0%
10%
20%
30%
40%
50%
60%
July 31, 2012 July 29, 2014 Aug 20 Sep 16 Oct 28
Too accommodative Just right Too restrictive Don't know/unsure
Too accomodative
Don't know/unsure
Too restrictive
Just right

CNBC Fed Survey – October 28, 2014
Page 17 of 31

FED SURVEY
October 28, 2014
14. 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
28
Jun 4 Jul 29
Aug
20
Sep
16
Oct
28
Dec 31, 2014 0.28%0.21%0.21%0.20%0.19%0.15%0.27%0.17%0.21%0.16%0.14%0.10%
Jun 30, 2015 0.50%0.39%0.40%0.33%
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%
Jun 30, 2016 1.53%1.56%1.48%
Dec 31, 2016 1.99%2.13%2.04%
0.28%
0.21% 0.21%
0.20%
0.19%
0.15%
0.27%
0.17%
0.21%
0.16%
0.14%
0.10%
0.50%
0.39%
0.40%
0.33%
0.97%
0.92%
0.82%
0.70%
0.72%
0.83%
0.99%
0.68%
1.05%
0.89%
0.98%
0.89%
1.53%
1.56%
1.48%
1.99%
2.13%
2.04%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Dec 2016
June 2016
Dec 2015
June 2015
Dec 2014

CNBC Fed Survey – October 28, 2014
Page 18 of 31

FED SURVEY
October 28, 2014
15. At what fed funds level WILL/SHOULD the Federal Reserve
stop hiking rates in the current cycle? That is, what will/should
be the terminal rate?

3.16%
3.44%
3.20%
3.39%
3.30%
3.40%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Will Should
Aug 20 Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014
16. 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
Average:

Aug 20 survey:
Q4 2017

Sep 16 survey
Q3 2017

Oct 28 survey
Q4 2017

CNBC Fed Survey – October 28, 2014
Page 20 of 31

FED SURVEY
October 28, 2014
17. How much concern do you have that each of the following
could create wider global risks? (1=Not concerned at all,
10=Highest level of concern)

5.4
4.7
5.0
5.4
4.4
4.3
3.7
2.7
0
1
2
3
4
5
6
7
8
9
10
Economic
weakness in
Europe
Economic
weakness in Asia
ISIS insurgency
and the U.S.
response
Trouble between
Russia and
Ukraine
Sep 16 Oct 28

CNBC Fed Survey – October 28, 2014
Page 21 of 31

FED SURVEY
October 28, 2014
18. Will the European Central Bank do outright quantitative
easing?

74%
15%
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Yes No Don't know/unsure

CNBC Fed Survey – October 28, 2014
Page 22 of 31

FED SURVEY
October 28, 2014
19. When do you believe the ECB will announce its quantitative

0%
5%
10%
15%
20%
25%
30%
Nov Dec Jan
'15
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec After
Dec
'15
Average:

February 2015

CNBC Fed Survey – October 28, 2014
Page 23 of 31

FED SURVEY
October 28, 2014
20. What is the single biggest threat facing the U.S. economic
recovery?

0% 5% 10% 15% 20% 25% 30% 35%
European recession/financial crisis
Tax/regulatory policies
Slow job growth
Inflation
Deflation
Debt ceiling
Too little budget deficit reduction
Too much budget deficit reduction
Rise in interest rates
Geopolitical risks
Other
Don't know/unsure
European
recession/
financial
crisis
Tax/regula
tory
policies
Slow job
growth
Inflation Deflation
Debt
ceiling
Too little
budget
deficit
reduction
Too much
budget
deficit
reduction
Rise in
interest
rates
Geopolitic
al risks
Other
Don't
know/uns
ure
Apr 30 20% 31% 20% 0% 2% 2% 2% 9% 11% 0%
Jun 18 15% 28% 20% 3% 3% 0% 2% 13% 13% 0%
Jul 30 8% 30% 22% 0% 2% 2% 0% 4% 10% 14% 4%
Sep 17 4% 27% 22% 2% 0% 4% 2% 4% 18% 7% 2%
Oct 29 8% 29% 24% 3% 3% 3% 3% 5% 8% 13% 0%
Dec 17 5% 32% 29% 2% 0% 2% 2% 2% 15% 2% 2%
Jan 28 '14 7% 21% 30% 2% 0% 0% 2% 2% 12% 21% 0%
Mar 18 10% 23% 26% 3% 5% 0% 0% 8% 5% 18% 0%
Apr 28 3% 26% 21% 3% 5% 0% 3% 3% 8% 18% 13% 0%
Jul 29 12% 29% 12% 6% 3% 0% 0% 0% 12% 12% 12% 3%
Sep 16 6% 26% 29% 6% 3% 0% 0% 0% 6% 11% 11% 3%
Oct 28 31% 18% 15% 3% 3% 0% 0% 3% 10% 8% 8% 3%
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

CNBC Fed Survey – October 28, 2014
Page 24 of 31
FED SURVEY
October 28, 2014

21. 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,
201
1
Sep
19
Oct
31
Jan
23,
201
2
Mar
16
Apr
24
Jul
31
Sep
12
Dec
11
Jan
29,
201
3
Mar
19
Apr
30
Jun
18
Jul
30
Sep
6
Oct
29
Dec
17
Jan
28
201
4
Mar
18
Apr
28
Jul
29
Sep
16
Oct
28
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
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%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Survey Dates

CNBC Fed Survey – October 28, 2014
Page 25 of 31
FED SURVEY
October 28, 2014

22. What is your primary area of interest?

Thomas Costerg, Standard Chartered Bank: The consensus has
tended to overestimate U.S. GDP growth and my worry is that
expectations for 2015 are starting from a high point; there is a risk
of disappointment, once again. The U.S. consumer may be in a more
fragile state than expected, especially if wage growth remains
subdued. Global headwinds may affect corporate investment. Also
the Fed will start hiking. And there could be a return of political
uncertainty after the midterm elections. The stars are not fully
aligned to reach escape velocity. The good news is that the economy
is releveraging; but the question is whether this will be enough to
propel growth.

Tony Crescenzi, PIMCO: The Fed must plan a “great escape” from
three things, a liquidity trap – weak bank lending, quantitative
easing, the zero policy rate. Recent events show the difficulty the
Fed is having. This escape hasn’t been and won’t be easy. The Fed
Economics
51%
Equities
13%
Fixed Income
18%
Currencies
3%
Other
15%

CNBC Fed Survey – October 28, 2014
Page 26 of 31
FED SURVEY
October 28, 2014

must design an escape that avoids upsetting too quickly the three
main objectives it has had ever since it began its extraordinary
monetary accommodation in 2008: lower rate expectations, reduce
interest rate volatility, and prod investors to move outward along the
risk spectrum. This means being careful about making its escape
transmit through the five main transmission effects of monetary
policy:
1) Stock prices
2) Bond yields
4) Bank lending standards
5) The U.S. dollar
Notably, the dollar has strengthened in anticipation of this escape. In
essence this means the Fed is already tightening, mainly through its
communications and reduction in bond buying. Consider that by not
buying bonds next year it will be akin to tightening, just as the
trillion dollars of bond buying last year was easing. It is
unconventional tightening, just as bond buying is unconventional
easing. PIMCO continues to expect that in the next rate cycle, the
Fed won’t raise rates as much as it did in the past. We believe the
neutral rate is about 2% rather than the old 4%. Why? These five
reasons noted by the Fed in the March 19th minutes, page 7:
1) Higher precautionary savings
2) Higher global savings
3) Demographics
4) Slow credit growth (If the Fed raises rates to rein in
credit growth, if there is no credit growth then there is
nothing to rein in.)
5) Lower growth potential owing to lack of investment in
recent years
Moreover, when the Fed raises rates to 2% it will be similar to
raising it to 3% to 4% because the Fed will be combining its rate
actions with balance sheet actions, a massive amount of total
tightening.

CNBC Fed Survey – October 28, 2014
Page 27 of 31
FED SURVEY
October 28, 2014

John Donaldson, Haverford Trust Co.: Recent volatility has been
a useful reminder that the path toward normalization of monetary
policy will be anything but a straight line. The 10-year Treasury
trading below 1.90% last Wednesday looks like a classic capitulation

Neil Dutta, Renaissance Macro Research: While the markets
have been volatile, the U.S. economy has been remarkably stable.
Growth has been at or above 3%, four of the last five quarters.
Importantly, nonfarm payrolls have expanded above 200,000 per
month 75% of the time over the last year. That's more than enough
to keep pushing the unemployment rate down. We'll likely be at the
Fed's 2015 central tendency estimate at least two quarters ahead of
schedule. This supports earlier rate hikes than the forward markets
have currently priced.

Dennis Gartman, The Gartman Letter: All I know is that I'm very,
very, very glad I don't have to make these decisions impacting so
many people in so many different ways... and especially at the pay
levels of those involved!

Kevin Giddis, Raymond James/Morgan Keegan: If they gave an
award for resiliency, the10-year Treasury note would win. Never
have so many predicted so poorly the yield on this note. The
problem with 2015's prediction is we won't likely do much better. A
tip of the hat to Janet Yellen is overdue.

Constance Hunter, KPMG LLP: If the global situation does not
derail the recovery, 2015 could well be the year we finally see a bit
of wage pressure that will lead to higher rates and a Fed that
reduces its balance sheet. The Yellen Fed is likely to be cautious and
may not move a steady 25bp per quarter.

Hugh Johnson, Hugh Johnson Advisors: The geopolitical risks to
the recovery are minimal; the risks associated with higher interest

CNBC Fed Survey – October 28, 2014
Page 28 of 31
FED SURVEY
October 28, 2014

rates...in time...are significant. Currently, there are no risks to the
current stock market-economic-interest rate cycle that threaten the
end. The most significant impediment to higher stock prices will
continue to be:
(a) The growth rate of earnings, which will remain single-digit
through 2015
(b) Modestly higher longer-term interest rates which will
impede multiple expansion and
(c) Valuation which is a function of the first two.
Based upon valuation alone, it is difficult to make the case for
significantly higher stock prices...higher yes...significantly higher no.

David Kotok, Cumberland Advisors: U.S. tax policy discourages
growth. There is no chance it changes before 2017.

Alan Kral, Trevor Stewart Burton & Jacobsen: If Republicans
win election only then can be a watershed.

Subodh Kumar, Subodh Kumar & Associates: From momentum
and into value are likely portfolio change factors as quantitative ease
bifurcates. The urgency arises from geopolitics, the risk profiles in
capital markets and the ability of companies to deliver operational
hitherto have driven performance. Current systemic risk also lies in
non-bank and fiduciary issues, neither conducive to momentum
investment. Considerations make diversification dominated by
geographic dispersion to be simplistic. Our favor is to discriminate
for quality.

Guy LeBas, Janney Montgomery Scott: In response to the
terms of the Fed meeting, October is likely to be a snoozer, as the
FOMC has fallen into the pattern of only taking action or making
meaningful qualitative statements at their quarterly meetings. ECB

CNBC Fed Survey – October 28, 2014
Page 29 of 31
FED SURVEY
October 28, 2014

action--or inaction, really--is the bigger issue. Based on the amount
of ABS and corporate bonds outstanding, there is simply no way the
ECB can enact a right-sized, deflation-fighting QE without buying
sovereign debt. And that action is proscribed by their charter, so
Draghi has quite the inconvenient situation on his hands. At the end
of the day, maintaining the great Eurozone experiment is probably
more important than fighting deflation.

John Lonski, Moody's: Similar to late 1998 and early 1999,
problems abroad could push U.S. borrowing costs down to levels that
spark unexpectedly rapid growth by household expenditures, but
today's consumer is much weaker financially than in the late 1990s.
Income and wealth inequality could become a major political issue in
the year ahead; note that Yellen addressed this matter in a recent
speech.

Drew Matus, UBS Investment Research: Labor market
improvement continues apace. Further declines in the
unemployed/job openings ratio and/or increases in the quit rate will
support wage gains in late 2014/early 2015.

Rob Morgan, V2V Associates: What's the rush to reduce the size
of the Fed's balance sheet? Both Janet Yellen and Ben Bernanke
have said the process could take the better part of a decade. Rising
inflation could make that decision a poor one, but there are no signs
of that on the horizon.

Joel Naroff, Naroff Economic Advisors: Once the Fed recognizes
that the labor markets are indeed tight, the path to higher rates will
be clear and let's not forget that 25 bps each meeting for one year is
200 bps.

Phil Orlando, Federated Investors: The potential for a "wave"
election in the Senate next month could have favorable fiscal policy
implications in 2015.

CNBC Fed Survey – October 28, 2014
Page 30 of 31
FED SURVEY
October 28, 2014

James Paulsen, Wells Capital Management: The clearest
message coming from the Fed is it will not change its policy until it is
"forced" to do so. Despite improved economic performance, they
keep changing the parameters so they can remain strongly
accommodative. This tells me that when the Fed does finally begin
to exit it will only be because it is forced to do so (i.e., because of
widening panic it is behind the curve) which is not a comfortable
thought for an investor.

Lynn Reaser, Point Loma Nazarene University: While the Fed
debates whether the chances of inflation running below 2% have
diminished or not, the more important question may be whether 2%
is even the right target. The risks from Ebola and the stock market
have eased, but the Islamic State, Europe, and China could all
challenge the consensus sunnier outlook.

John Roberts, Hilliard Lyons: At this point we see no issues to
derail the current upward trend in the equity markets and as long as
the current upward trajectory in earnings continues, equity markets
can move higher, in spite of slightly extended equity valuations.

John Ryding, RDQ Economics: The Federal Reserve has long
overstayed its welcome with zero rates and QE. We are now
entering the phase where monetary policy starts to reposition for the
first rate hike, which will be driven by labor market developments.
The rate at which the Fed ends hiking may be higher than the long-
run sustainable rate (as it has overshot in the past).

Allen Sinai, Decision Economics: The U.S. economy, its private
sector, looks the healthiest it has been since the 1990s. Secular
stagnation for the U.S. is just not in the cards.

Diane Swonk, Mesirow Financial: The Fed has consistently
missed its target on inflation; recent cola increases underscore the
problem politically. The Fed will have to more aggressively combat

CNBC Fed Survey – October 28, 2014
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FED SURVEY
October 28, 2014

slowing inflation going forward; this is yet another reason for