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FED SURVEY

January 27, 2015


These survey results represent the opinions of 33 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 January 22-23, 2015. 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. What is the probability the Fed will begin a new QE program in


the next year/two years? (0%=No chance of new QE, 100%=Certainty
of new QE)
Next year

Next two years

20%

18%
17%

18%

16%

14%
14%

14%
14%

12%

10%

10%

10%

9%

8%

6%

4%

Sep 16

Oct 28

Dec 16

Jan 27

Chance of new QE

Note: In some previous surveys, this question was: What is the probability the Fed will begin a new QE
program in the 12/24 months after it concludes the current QE program?

CNBC Fed Survey January 27, 2015


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FED SURVEY
January 27, 2015
2. The Fed will remove the phrase patient from its monetary
policy statement in ...

0%

January

0%

February

0%

5%

10%

15%

20%

25%

30%

33%

March

27%

April

21%

June

July

0%

August

0%

September

3%

October or later

3%

CNBC Fed Survey January 27, 2015


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35%

FED SURVEY
January 27, 2015
3. 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?
Considerably more slack now

Modestly more slack now

No difference

Modestly less slack now

Considerably less slack now


80%

69%

70%

60%
60%

55%
50%

48%

50%

Modestly more slack

40%
40%

36%

34%

30%

Modestly less slack

24%
Considerably more slack

20%

20%

11%
8%

10%

4%

4%

9%

9%

3%

No difference

Sep 16

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16%

16%
9%

8%
5%

6%

6%

August 20

19%

Considerably less slack

0%

July 29

18%

5%
0%
Oct 28

6%
0%
Dec 16

Jan 27

FED SURVEY
January 27, 2015
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?
Considerably more slack now

Modestly more slack now

No difference

Modestly less slack now

Considerably less slack now


70%
64%

64%

60%
60%

Modestly more slack

56%

59%

55%

50%

40%

No difference

30%

Modestly less slack

24%
Considerably more slack

20%

19%
13%

10%
8%

13%
9%

Considerably less slack

0%
July 29

August 20

Sep 16

CNBC Fed Survey January 27, 2015


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Oct 28

Dec 16

0%
Jan 27

FED SURVEY
January 27, 2015
4. Where do you expect the S&P 500 stock index will be on ?
June 30, 2015

December 31, 2015

June 30, 2016

December 31, 2016

2,400

2311

2296

2,300

2250

2248

2187

2,200

2149

2194

2111
2075

2,100

2,000

2017

2029

2122

2109

2093
2066

2053

1,900

1,800
Apr 28

Jun 4

July 29

Sep 16
Survey Dates

CNBC Fed Survey January 27, 2015


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Oct 28

Dec 16

Jan 27

FED SURVEY
January 27, 2015
5. What do you expect the yield on the 10-year Treasury note will
be on ?
June 30, 2015

December 31, 2015

June 30, 2016

December 31, 2016

4.0%

3.54%

3.52%

3.43%

3.5%

3.45%
3.30%

3.24%
3.15%

3.16%

3.19%
3.04%

3.0%

2.90%

2.96%
2.80%
2.63%
2.54%

2.5%

2.14%

2.0%
Apr 28

Jun 4

Jul 29

Sep 16
Survey Dates

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Oct 28

Dec 16

Jan 27

FED SURVEY
January 27, 2015
6. Which of the following reasons primarily account for low
interest rates on U.S. government debt? (Select one or two
reasons)
80%

72%
70%

60%

50%

40%

28%

30%

20%

19%

19%
13%

9%

10%

3%
0%

Other responses:
- High demand relative to supply
- Higher U.S. growth and interest rate 0utlook relative to
other countries
- Low competitive yields on other Sovereigns

CNBC Fed Survey January 27, 2015


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FED SURVEY
January 27, 2015
7. What is your forecast for the year-over-year percentage change
in real U.S. GDP for ?
2015

2016

3.1%
+3.02%

+3.02%
+3.00%

3.0%

+2.99%

3.0%
+2.90%

+2.90%

+2.90%

2.9%

+2.88%

2.9%
+2.81%

2.8%
+2.80%
+2.75%

2.8%

2.7%

Jan 28,
'14

2015 +2.90%

Mar 18

Apr 28

Jun 4

Jul 29

Sep 16

Oct 28

Dec 16

Jan 27,
'15

+3.02%

+3.00%

+2.81%

+2.75%

+2.90%

+2.90%

+3.02%

+2.99%

+2.88%

+2.80%

2016

CNBC Fed Survey January 27, 2015


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FED SURVEY
January 27, 2015
8. What is your forecast for the year-over-year percentage change
in the headline U.S. CPI for ?
2015

2016

2.4%

2.2%

2.0%

2.29%

2.17%

2.27%

2.07%

2.02%

2.01%

1.8%

1.74%
1.6%

1.4%

1.2%

1.17%
1.0%
Jun 4

Jul 29

Sep 16

Oct 28

Survey Dates

CNBC Fed Survey January 27, 2015


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Dec 16

Jan 27, '15

FED SURVEY
January 27, 2015
9. When do you expect the Fed to allow its balance sheet to
decline?
Apr 28

Jun 4

Jul 29

Sep 16

Oct 28

Dec 16

Jan 27 '15

35%

Averages:
30%

April 28 survey:
June 4 survey:

Oct '15

Mar '16

June 29 survey:

Dec '15

Sept. 16 survey:

Dec '15

25%

Oct. 28 survey:

Jan '16

Dec. 16 survey:

Feb '16

Jan. 27 survey:

Apr '16

20%

15%

10%

0%

Oct
Nov
Dec
Jan '15
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan '16
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan '17
After Jan

5%

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?

CNBC Fed Survey January 27, 2015


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FED SURVEY
January 27, 2015
10. When do you think the FOMC will first increase the fed funds
rate?

60%

April 28

Jun 4

Jun 29

Aug 20

Sep 16

Oct 28

Dec 16

Jan 27 '15

Averages:

April 28 survey:

July 2015

50%

June 4 survey:

August 2015
July 29 survey:

40%

August 2015
Aug 20 survey:

July 2015
30%

Sep 16 survey:

June 2015
Oct 28 survey:

July 2015

20%

Dec 16 survey:

July 2015
Jan 27 '15 survey:

10%

Sep 2015

Aug
Sep
Oct
Nov
Dec
Jan '15
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan '16
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan '17
After Jan '17
Feb
Mar
After Mar '17

0%

CNBC Fed Survey January 27, 2015


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FED SURVEY
January 27, 2015
11. How would you characterize the Fed's current monetary
policy?
Too accommodative

Just right

Too restrictive

Don't know/unsure

60%

Too accomodative
50%

49%

49%

49%

49%

50%

47%

46%
43%

43%

50%

43%

44%
Just right

40%

39%

30%
28%

20%
17%

13%
10%
6%
3%

3%

5%

3%

3%
Too restrictive

0%
Jul 31, '12 Jul 29, '14

Aug 20

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Don't know/unsure
6%

6%

Sep 16

Oct 28

Dec 16

3%
0%
Jan 27, '15

FED SURVEY
January 27, 2015
12. Where do you expect the fed funds target rate will be on ?
2.5%

2.13%

Dec 2016
2.04%

1.99%

1.93%

2.0%

1.75%

1.53%

1.56%
1.48%

1.5%

1.38%
1.26%
June 2016
1.05%

1.0%

0.97%

0.99%

0.98%

0.92%

0.89%

0.89%

0.83%

0.82%

0.73%
0.83%

Dec 2015

0.70% 0.72%

0.68% 0.50%

0.5%

0.39% 0.40%
0.33% 0.31%
0.25%

June 2015

0.0%
Jul
30

Sep
17

Oct
29

Dec
17

Jan
28
'14

Jun 30, 2015

Mar
18

Apr
28

Jun
4

Jul
29

Aug
20

Sep
16

Oct
28

Dec
16

Jan
27,
'15

0.50% 0.39% 0.40% 0.33% 0.31% 0.25%

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% 0.83% 0.73%
Jun 30, 2016

1.53% 1.56% 1.48% 1.38% 1.26%

Dec 31, 2016

1.99% 2.13% 2.04% 1.93% 1.75%

CNBC Fed Survey January 27, 2015


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FED SURVEY
January 27, 2015
13. At what fed funds level will the Federal Reserve stop hiking
rates in the current cycle? That is, what will be the terminal
rate?
Aug 20

3.16%

Sep 16

3.20%

CNBC Fed Survey January 27, 2015


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Oct 28

3.30%

Dec 16

3.17%

Jan 27, '15

3.11%

FED SURVEY
January 27, 2015
14. When do you believe fed funds will reach its terminal rate?
Aug 20

Sep 16

Oct 28

40%

Average:
35%

Aug 20 survey:

Q4 2017

30%

Sep 16 survey

Q3 2017

25%

Oct 28 survey

Q4 2017

20%

Dec 16 survey

Q1 2018

15%

Jan 27 survey
10%

Q1 2018

5%

0%

CNBC Fed Survey January 27, 2015


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Dec 16

Jan 27 '15

FED SURVEY
January 27, 2015
15. How will lower oil prices affect U.S. GDP/core inflation in
2015?
0.30

0.27

0.20

0.10

Pct. points

0.00

-0.10

-0.20

-0.28

-0.30

-0.40
GDP

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Inflation

FED SURVEY
January 27, 2015
17. What is your forecast for WTI crude oil's lowest price in the
current downturn?
$45

$40

$40

$35

$30

$25

$20

$15

$10

$5

$0

CNBC Fed Survey January 27, 2015


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Average Forecast

FED SURVEY
January 27, 2015
18. The current decline in oil prices is primarily the result of:
60%

56%

50%

40%

28%

30%

20%

13%
10%

3%
0%
Excess supply

Weak demand

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Equal parts excess Don't know/unsure


supply and weak
demand

FED SURVEY
January 27, 2015
19. Over the course of the announced new program, what will be
the effect of European QE in the following areas relative to their
current level?
Lower

No change

Higher

31%

U.S. stocks

69%

94%

European stocks 6%

22%

U.S. interest rates

44%

50%

European interest rates

16%

56%

European unemployment

0%

10%

CNBC Fed Survey January 27, 2015

20%

3%

66%

31%

European inflation 6%

34%

41%

34%

European economic growth

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34%

63%

30%

40%

50%

60%

70%

80%

90%

100%

FED SURVEY
January 27, 2015
20. Relative to your expectations, the QE program announced by
the ECB was:
70%

63%
60%

50%

40%

28%

30%

20%

9%

10%

0%
More aggressive

CNBC Fed Survey January 27, 2015


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Less aggressive

As expected

FED SURVEY
January 27, 2015
21. The ECB will hit its 2% inflation target within:
40%

34%

35%

30%

25%

22%
20%

16%
15%

13%

13%

10%

5%

3%

0%
One year

Two years

Three years

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Four years

Five or more
Don't
years
know/unsure

FED SURVEY
January 27, 2015
22. European QE announced Thursday makes a Fed rate hike:
70%

63%
60%

50%

40%

30%

25%

20%

13%
10%

0%
More likely

CNBC Fed Survey January 27, 2015


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Less likely

No effect

FED SURVEY
January 27, 2015
23. How much concern do you have that economic weakness in
Europe could create wider global risks?
(1=Not concerned at all, 10=Highest level of concern)

Sep 16

Oct 28

Dec 16

Jan 27 '15

10

5.4

5.4

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4.8

5.0

FED SURVEY
January 27, 2015
24. Has the U.S. stock market already discounted a fed funds rate
hike by the Federal Reserve next year?
Dec 16

Jan 27

60%

56%
53%
50%

40%

36%

38%

30%

20%

8%

10%

9%

0%
Yes

CNBC Fed Survey January 27, 2015


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No

Don't know/unsure

FED SURVEY
January 27, 2015
25. What is the single biggest threat facing the U.S. economic
recovery?
Apr 30

Jun 18

Jul 30

Mar 18

Apr 28

Jul 29

0%

5%

Sep 17

Oct 29

Sep 16

Oct 28

10%

15%

Dec 17

Jan 28 '14

Dec 16

Jan 27 '15

20%

25%

30%

35%

40%

45%

European recession/financial crisis


Tax/regulatory policies
Slow job growth
Inflation

Deflation
Debt ceiling
Rise in interest rates
Geopolitical risks

Global economic weakness


Slow wage growth
Other
Don't know/unsure
Global
Rise in
Slow wage
Geopolitic
economic
interest
growth
al risks
weakness
rates

European
Tax/regula
recession/
tory
financial
policies
crisis
31%
20%

Don't
know/uns
ure

Other

Apr 30

0%

11%

2%

2%

0%

20%

Jun 18

0%

13%

0%

3%

3%

20%

28%

15%

Jul 30

4%

14%

10%

2%

2%

0%

22%

30%

8%

Sep 17

2%

7%

18%

4%

0%

2%

22%

27%

4%

Oct 29

0%

13%

8%

3%

3%

3%

24%

29%

8%

Dec 17

2%

2%

15%

2%

0%

2%

29%

32%

5%

Jan 28 '14

0%

21%

12%

0%

0%

2%

30%

21%

7%

Mar 18

0%

18%

5%

0%

5%

3%

26%

23%

10%

Apr 28

0%

13%

18%

8%

0%

5%

3%

21%

26%

3%

Jul 29

3%

12%

12%

12%

0%

3%

6%

12%

29%

12%

Sep 16

3%

11%

11%

6%

0%

3%

6%

29%

26%

6%

Oct 28

3%

8%

8%

10%

0%

3%

3%

15%

18%

31%

Dec 16

0%

3%

14%

3%

0%

6%

3%

14%

14%

40%

Jan 27 '15

0%

16%

16%

6%

0%

0%

0%

9%

13%

0%

6%

41%

CNBC Fed Survey January 27, 2015


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Debt
ceiling

Deflation Inflation

Slow job
growth

FED SURVEY
January 27, 2015
Other responses:
"Fears" of FED

SURVEY

inflation/overheat/is
Fed behindApril
the curve 30,

Chinese economic or
fiscal problems

Entitlements
Rising dollar

Congress

26. 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)
40%
36.1%

35%
34.0%

30%

28.5%

25.9%

25%

26.0%

25.5%

20%

20.3%

20.6%

20.4%

18.4%

18.2%

16.9%

19.1%
17.6%

15%

16.9%
16.2%
15.2%

17.3%
15.3%

16.2%
15.1%
15.0%

14.6%

13.6%
13.0%

10%

5%

0%

Aug
Jan
11, Sep Oct 23, Mar Apr
201 19 31 201 16 24
1
2

Jul
31

Jan
Sep Dec 29, Mar Apr
12
11 201 19 30
3

Jun
18

Jul
30

Jan
Sep Oct Dec 28 Mar Apr
6
29
17 201 18 28
4

Jul
29

Sep Oct Dec


16 28
16

Jan
27
'15

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

Survey Dates

CNBC Fed Survey January 27, 2015


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FED SURVEY
January 27, 2015
27. What is your primary area of interest?

FED SURVEY
April 30,
Other
22%

Currencies
0%
Fixed Income
16%

Economics
53%

Equities
9%

Comments:
John Donaldson, Haverford Trust Co.: The FOMC is in a terrible
spot here. They need to begin to normalize rates so they have the
full range of tools available if/when they need them in the next cycle.
The markets seem to think that even adjusting policy rates to 1% is
equivalent to an economy-choking tightening. No matter where the
Fed takes the Funds rate, it would still be an exceptionally
accommodative policy.
Mike Englund, Action Economics: As the world's central banks
continue to swap sovereign term-debt with overnight central bank
reserve credit, forcing lenders to bid up the price of the remaining
debt and equity instruments, it is likely that central banks are
inflating term-asset values, but unlikely that they are increasing the
willingness of investors to take risk. Indeed, risk-taking behavior for
direct investment is likely being trimmed, leaving these global
strategies counter-productive at best.
CNBC Fed Survey January 27, 2015
Page 27 of 30

FED SURVEY
January 27, 2015
Kevin Giddis, Raymond James/Morgan Keegan: The U.S.
economy is battling different forces in 2015 vs. 2014. Low wage
growth and a FED
lack ofSURVEY
inflation pose more than idle threats to
AprilIf30,
economic growth.
progress isn't made on both of these fronts,
then there is a risk, coupled with a global slowdown, that the U.S.
growth rate would retreat to levels that could be compared to a
recession.
Hugh Johnson, Hugh Johnson Advisors: Prospects for the U.S.
stock market remain quite modest given (a) a growth rate for 2015
and 2016 S&P earnings of 4.4% and 4.5% respectively and (b) a
modest shift toward restraint by the Fed (preventing multiple
expansion). This forecast is of course consistent with common sense
after double-digit gains in each of the last two years. A higher return
than 5% is possible if (a) earnings are stronger than forecast or (b)
there is a surge in speculation in U.S. financial markets driven in part
by a stronger dollar. Not to be taken lightly or dismissed. The
biggest risk, from the decline in oil and commodity prices, is the
transmission of a Russian recession (deep recession in 2015) to
Europe, China, and beyond although it is unlikely to derail the U.S.
expansion. With luck, we will muddle through.
John Kattar, Ardent Asset Advisors: The Fed seems to have
decided to raise rates later this year, almost irrespective of the data.
The greatest risk to that scenario is further and persistent dollar
strength.
David Kotok, Cumberland Advisors: There is much more longerterm upside ahead from Eurozone QE. The bull market in stocks is
not over.
Rob Morgan, V2V Associates: The media has focused intently on
deflation lately. I think the most serious deflation problem involves
the New England Patriots and footballs, not the deflation problem
with worldwide economies.
CNBC Fed Survey January 27, 2015
Page 28 of 30

FED SURVEY
January 27, 2015
Joel Naroff, Naroff Economic Advisors: QE in Europe will only
add to U.S. growth, lowering the unemployment rate and adding to
FED SURVEY
the wage pressures
that should ultimately raise inflation.
April 30,
James Paulsen, Wells Capital Management: We enter 2015 with
broad-based concerns about global deflation. Given the massive
declines in sovereign bond yields about the globe and a large decline
in energy costs, international and U.S. economic growth is likely to
improve in 2015. If global growth bounces, current deflation fears
will likely fade and within the U.S., overheat fears may materialize as
the unemployment rate heads below 5%. That is, could 2015 begin
with deflationary fears and end with inflationary fears?
Lynn Reaser, Point Loma Nazarene University: As the Fed parts
company with other central banks, it faces a potentially hazardous
road. Oil could be especially slippery, giving the economy either
more or less growth and more or less headline inflation.
John Ryding, RDQ Economics: In my judgment markets are
underestimating the degree to which falling unemployment will push
the Fed to hiking rates and overestimating the influence of factors
such as events in the euro area
Allen Sinai, Decision Economics: The ECB and other central banks
are still running the show. The best is yet to come in global stock
markets. The ECB action was absolutely brilliant monetary policy
making.
Mark Vitner, Wells Fargo: We expect single-family homebuilding
to be an upside surprise in 2015. On the downside, the dramatic
rise in the value of the dollar and the global economic slowdown are
taking a toll on U.S. manufacturing. Exports are faltering and
imports are rising.
Scott Wren, Wells Fargo Advisors: The magnitude of the ECB's
CNBC Fed Survey January 27, 2015
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FED SURVEY
January 27, 2015
announced QE program is not a cure-all for Euro zone woes. It is
likely more QE will follow the already announced amount. Structural
FED
SURVEY
issues in terms
of the
labor market and sovereign debt levels need to
be addressed.April
The 30,
ECB is merely "pushing on a string" with this first
stab at reviving the economy and avoiding deflation. Solid,
dependable improvement is going to likely take years....and more
extreme action from the ECB and Euro zone governments.
Mark Zandi, Moody's Analytics: Despite all the cross-currents and
heightened volatility in global financial and commodity markets, U.S.
economic growth prospects remain strong.

CNBC Fed Survey January 27, 2015


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