FED SURVEY

August 24, 2016
These survey results represent the opinions of 39 of the nation’s top money managers,
investment strategists, and professional economists.

FED SURVEY

They responded to CNBC’s invitation to participate in our online survey. Their responses were
collected on August 18-20, 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:
0%

10%

50%

60%

70%

80%

79.5%

0.0%

CNBC Fed Survey – August 24, 2016
Page 1 of 31

40%

0.0%

Keep rates unchanged

Don't know/unsure

30%

20.5%

Raise interest rates

Lower interest rates

20%

90%

100%

FED SURVEY
August 24, 2016
(For those answering rates would be kept unchanged)
What is the main reason the Fed will keep rates unchanged
FED SURVEY
at its upcoming
meeting?
April 30,
June 14

July 26

0%

Markets unprepared for rate hike

10%

Inconsistent or weak jobs growth

30%

40%

29%
18%
14%

50%

37%

27%

41%

0%
0%
3%
13%
17%

0%

50%

0%
0%

Other:



All of the above except BREXIT, and also not
wanting to impact election.
Inflation below target
Low growth rate
Mix of concerns - Brexit, China, European
Banks. They cannot afford to dampen
consumer spending in the U.S. if the equity
market backtracks.

CNBC Fed Survey – August 24, 2016
Page 2 of 31

60%

33%

15%

Global growth concerns

Uncertainty surrounding Brexit

20%

5%

Other

Don't know/unsure

Aug 24






No reason to hike.
Presidential election
Reluctance to change policy ahead of U.S.
elections
Risk aversion, wait for more data
They're afraid to take action this close to an
election.
Uncertain about reaching 2% target inflation

FED SURVEY
August 24, 2016
2. After its upcoming meeting, the Federal Reserve's next
FEDmove
SURVEY
directional
will most likely be:
April 30,
Raise interest rates

Lower interest rates

Move to negative interest rates

Launch new quantitative easing

100%

100%

94%

90%

88%

90%

95%
Raise interest rates

92%

80%

70%

60%

50%

40%

30%

Lower interest rates

20%

10%

10%

10%

Launch new quantitative easing

4%

5%

3%

3%

0%
Jan 27

Mar 15

Apr 26

CNBC Fed Survey – August 24, 2016
Page 3 of 31

Jun 14

Jul 26

Aug 24

FED SURVEY
August 24, 2016
When will the Federal Reserve make its next move?

FED SURVEY
30, 26
March 15 AprilApril
Survey
Survey
For
those
who
said:

Avg.
month

For
those
who
said:

Raise
rates
(90%)

June
2016

Raise
rates
(94%)

Lower
rates
(10%)

Oct
2016

Lower
rates
(4%)

--

Move
to neg.
rates
(0%)

--

New
quant.
easing
(2%)

Move
to neg.
rates
(0%)

New
quant.
easing
(0%)

June 14
Survey

Avg.
month

For
those
who
said:

Avg.
month

August
2016

Raise
rates
(95%)

Sept
2016

Sept
2016

Lower
rates
(3%)

2016

For
those
who
said:

Raise
rates
(100%)

Lower
rates
(0%)

--

Move
to neg.
rates
(0%)

--

Move to
neg.
rates
(0%)

Dec
2016

New
quant.
easing
(3%)

March
2017

New
quant.
easing
(0%)

CNBC Fed Survey – August 24, 2016
Page 4 of 31

Oct

July 26
Survey
Avg.
month

Dec
2016

August 24
Survey
For
those
who
said:

Raise
rates
(92%)

Avg.
month

Jan
2017

--

Lower
rates
(3%)

June
2017

--

Move to
neg.
rates
(0%)

--

--

New
quant.
easing
(5%)

March
2017

FED SURVEY
August 24, 2016
3. How many times will the Federal Reserve hike rates this year
(2016)?

FED SURVEY

5.00

April 30,

4.50

4.00

3.50

2.83

3.00

2.50

2.10
1.88

2.00

1.60

1.54

1.50

0.86

1.00

0.95

0.50

0.00

Dec 15
'15

Jan 26
'16

Mar 15

Apr 26
Survey Dates

CNBC Fed Survey – August 24, 2016
Page 5 of 31

Jun 14

Jul 26

Aug 24

FED SURVEY
August 24, 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%

No effect
61%
60%

58%

56%

60%

58%

50%

42%

40%

39%

40%

37%

38%
Negative

30%

20%

10%

Positive

5%
2%

3%

Apr 26

Jun 14

2%

0%

0%

Mar 15

CNBC Fed Survey – August 24, 2016
Page 6 of 31

Jul 26

Aug 24

FED SURVEY
August 24, 2016
5. 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

50%

Democrat wins
45%

40%

47%

43%
Republican Wins

40%
37%

37%

35%
35%

30%

26%

30%

28%
26%

25%

23%
24%

20%

21%

18%

Doesn't matter
15%

16%

15%
10%

10%

8%

9%
5%

Don't know/unsure

0%

Mar 15

Apr 26

Jun 14

Jul 26

Aug 24
Note:

Starting with the question in this month’s survey ‘Republican wins’ was changed to ‘Trump wins’ and
‘Democrat wins’ was changed to ‘Clinton wins’

CNBC Fed Survey – August 24, 2016
Page 7 of 31

FED SURVEY
August 24, 2016
6. Which candidate has best economic policies?
60%

Jun 14
FED SURVEY

Jul 26

Aug 24

April 30,

50%

45%

42%

40%

40%

30%

44%

30%

32%

25% 24%

18%

20%

10%

0%

Clinton

CNBC Fed Survey – August 24, 2016
Page 8 of 31

Trump

Don't know/unsure

FED SURVEY
August 24, 2016
Which candidate would be best for the stock market?
Jun 14
FED SURVEY
60%

Aug 24

April 30,

50%

40%

Jul 26

47%

38% 38%

38%

31% 32%

31%

30%

25%
21%
20%

10%

0%

Clinton

CNBC Fed Survey – August 24, 2016
Page 9 of 31

Trump

Don't know/unsure

FED SURVEY
August 24, 2016
7. Please rate the proposed economic policies of each candidate in
the following areas on a scale of 0 to 5. (Higher number
FED
SURVEY
indicates
a better
policy.)
April 30,
Clinton

0.00

Taxes

Trump

1.00

2.00

3.00

4.00

1.63
3.11

Business regulation

1.55
3.11

2.61

Trade
1.26

2.32

Jobs

2.37

2.18

Budget deficits
1.55

CNBC Fed Survey – August 24, 2016
Page 10 of 31

5.00

FED SURVEY
August 24, 2016
8. Who is most likely to win this year's presidential election?…
Apr 26
FED SURVEY

90%

80%

Jun 14

Jul 26

Aug 24

April 30,
84%
80% 80%

70%

60%

52%
50%

40%

30%

26%

21%
20%

13%

15%

11%
10%

7%

5%

5%

0%
Clinton

CNBC Fed Survey – August 24, 2016
Page 11 of 31

Trump

Don't know/unsure

FED SURVEY
August 24, 2016
9. Where do you expect the S&P 500 stock index will be on … ?
December 31, 2016

December 31, 2017

FED SURVEY
2,350

2,300

April 30,
2311
2296

2,250

2247

2293
2254

2259

2234

2223

2275
2249
2244
2196
2183

2200

2,200

2166

2,150

2158

2159
2140

2,100

2149
2114

2107

2,050

2088
2035

2,000

2000
1,950

1,900

1,850

1,800

Dec Jan Mar April Jun
16 27 17 28 16
'15

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

CNBC Fed Survey – August 24, 2016
Page 12 of 31

Jul Aug
26 24

FED SURVEY
August 24, 2016
10.
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%

3.04%

2.83%
2.89%

2.88%

2.67%

2.58%

2.67%

2.5%

2.51%

2.54%

2.26%

2.24%

2.34%
2.11%

2.10%

2.0%

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
28
16
27
15
26
15
26
'16
Survey Dates

CNBC Fed Survey – August 24, 2016
Page 13 of 31

Jun
14

Jul
26

Aug
24

FED SURVEY
August 24, 2016
11.
?

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%
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%

1.78%

1.49%

1.41%

1.46%

1.43%
1.17%

1.22%
1.18%

1.0%

1.12%

0.91%

0.5%

0.0%

CNBC Fed Survey – August 24, 2016
Page 14 of 31

0.88%
0.84%
0.90%
0.85%

0.78%

0.74%

0.61%
0.59%

FED SURVEY
August 24, 2016
12.
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%

3.06%
2.98%

3.04%

2.85% 2.79%

2.5%

2.69%
2.65%
2.58%

2.73%

2.65%
2.64%
2.56%
2.42%
2.29%

2.0%

Survey Dates

CNBC Fed Survey – August 24, 2016
Page 15 of 31

FED SURVEY
August 24, 2016
13.

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

Jul 26 survey

Q4 2018

Aug 24 survey

Q4 2018

CNBC Fed Survey – August 24, 2016
Page 16 of 31

FED SURVEY
August 24, 2016
14.
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%

2.8%

+2.84%
+2.81%
+2.78%

+2.80%

+2.70%
+2.64%
+2.60%

2.6%

+2.43%

2.4%

+2.45%
+2.41%

+2.31%

2.2%

+2.17%
+2.14%

+2.25% +2.26%

+2.21%

+2.24%

+2.08%
+2.05%

2.0%
+1.95%
+1.88%

1.8%

1.6%
Dec 16

Jan 27,
Mar 17
'15

April
28

Jun 16 Jul 28

Sept
16

Oct 27 Dec 15

Jan 26
Mar 15 Apr 26 Jun 14 Jul 26 Aug 24
'16

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%
2017

CNBC Fed Survey – August 24, 2016
Page 17 of 31

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

FED SURVEY
August 24, 2016
15.
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%
2.12%

2.07%

2.0%

2.20%

2.13%

2.07%
2.02%

1.89% 1.88%

1.96%
1.8%

1.72%

1.75%

1.75%

1.66%

1.6%

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
28
16
27

Dec Jan Mar Apr
15
26
15
26
'16

Survey Dates

CNBC Fed Survey – August 24, 2016
Page 18 of 31

Jun
14

Jul
26

Aug
24

FED SURVEY
August 24, 2016
16.
When do you expect the Fed to allow its balance sheet to
decline?

FED SURVEY
April
30,
0%

10%

20%

30%

40%

Aug '16

Sep '16
Oct '16
Nov '16

5%

Dec '16

3%

Jan '17

3%

Feb '17
Mar '17

8%

Apr '17
May '17

5%

Jun '17

Jul '17

11%
3%

After Jul '17
Never

CNBC Fed Survey – August 24, 2016
Page 19 of 31

46%
16%

50%

FED SURVEY
August 24, 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%

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%

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%

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%
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%
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%

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%

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

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

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

3%
0%
0%
0%
0%
0%
3%

“Other” responses:


Declining corporate profits
Excessive inflation targeting

CNBC Fed Survey – August 24, 2016
Page 20 of 31

Fear itself

 weak capex

3%
7%
5%
7%
6%

13%
7%
14%

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%

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

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
Jul 26
Aug 24

European recession/
financial crisis

April 30,

Geopolitical risks

FED SURVEY

Rise in interest rates

17.
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%

FED SURVEY
August 24, 2016
18.
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%

25.5%

23.5%
22.9%
22.1%

20%

20.6%
20.3%

19.1%

15%

24.1%
22.2%
21.1%

20.4%

21.6%

18.2% 18.4%
18.6%
17.3%
16.9%
16.4%
17.4%
16.2%
16.9%
17.6%
15.1%
16.2%
15.2%

15.3%
15.0%
14.6%

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
Jul 26
Aug 24

10%

Survey Dates

CNBC Fed Survey – August 24, 2016
Page 21 of 31

FED SURVEY
August 24, 2016
19.
In the next 12 months, what percent probability do
you place on the UK and EU entering recession?

FED SURVEYJul 26
April 30,

Aug 24

100%

90%

80%

70%

60%

55.1%

51.7%

50%

38.3%

40%

34.6%

30%

20%

10%

0%

UK

CNBC Fed Survey – August 24, 2016
Page 22 of 31

EU

FED SURVEY
August 24, 2016
20.
50%

Current Fed policy is ...

FED SURVEY

46%
April 30,
45%

40%

38%

35%

30%

25%

20%

16%
15%

10%

5%

0%

Mostly influenced by
the latest economic
data

Mostly based on the
medium-term
economic outlook

CNBC Fed Survey – August 24, 2016
Page 23 of 31

Don't know/unsure

FED SURVEY
August 24, 2016
21.
Do Fed officials have a framework for deciding when
to adjust policy?
70%

FED SURVEY
April 30,

60%

60%

50%

40%

30%

24%
20%

16%

10%

0%

Yes

CNBC Fed Survey – August 24, 2016
Page 24 of 31

No

Don't know/unsure

FED SURVEY
August 24, 2016
22.
Relative to the Fed's current stance on monetary
policy, what tone do you expect from the Jackson Hole
SURVEY
meetingFED
this year?
April 30,
60%
54%
50%

40%

30%

24%
20%

14%
8%

10%

0%

More dovish

More hawkish

CNBC Fed Survey – August 24, 2016
Page 25 of 31

Neutral

Don't
know/unsure

FED SURVEY
August 24, 2016
23.

What is your primary area of interest?

FED SURVEY
April 30,
Other
19%
Currencies
0%

Fixed Income
8%

Economics
49%

Equities
24%

Comments:
Jim Bianco, Bianco Research: It should now be apparent that the
Fed has lost control of monetary policy. The markets are now
setting it. Whatever markets price in they get, because the Fed is
too afraid of causing a financial crisis with a surprise hike. In other
words, the inmates are running the asylum.
Peter Boockvar, The Lindsey Group: Being on constant Fed
Watch has become so exhausting. We've been led in so many
different directions only to be spun around again that until I see
exactly what they do, I'm losing patience in listening to what they
say.

CNBC Fed Survey – August 24, 2016
Page 26 of 31

FED SURVEY
August 24, 2016
Lou Brien, DRW Trading Group: The tricky thing for the Fed is
that they want to raise the funds rate. At the very least they want
SURVEY
the market to FED
believe
that they want to hike, while at the same time
April 30,
Yellen is suggesting
the eventual funds rate target is moving lower
because the assumed "neutral" rate is coming down, the result of
slow growth productivity.
John Donaldson, Haverford Trust Co.: The probabilities for fed
funds hikes are very understated as a result of the pending money
market fund regulation changes. The real odds of a hike are masked
by distortions in the pricing of short-term Treasury issues. You
should ignore the WIRP page on your Bloomberg.
Neil Dutta, Renaissance Macro Research: This is about intent.
The Fed does not intend to raise rates until they are forced to chase
the yield curve higher.
Mike Englund, Action Economics: The U.S. economy is stuck in a
slow-growth expansion that will never leave Fed doves comfortable
with tightening, though a desire for concession with Fed hawks will
allow one tightening before year-end, as seen last year. Dodd-Frank
regulations designed to minimize risk-taking, alongside other
regulatory headwinds, are incompatible with historically normal rates
of U.S. economic growth, leaving pressure for an excessively easy
monetary policy.
Robert Fry, Robert Fry Economics: This is how I would have
preferred to answer #20: Current Fed policy is . . . based on a
faulty model of the economy that significantly overstates the impact
of interest rates (especially long-term rates) on business fixed
investment and housing and fails to take into account the negative
impact of low interest rates on people who save via savings accounts
and CDs.

CNBC Fed Survey – August 24, 2016
Page 27 of 31

FED SURVEY
August 24, 2016
Art Hogan, Wunderlich Securities: The market has crossed the
Rubicon and is ready for rate normalization. Good news is good news
FED
in the economy.
TheSURVEY
Fed should take advantage of that. They can't
Aprilin30,
be the only policy
the economy. We need better fiscal policy
desperately.
Constance Hunter, KPMG LLP: The Fed is well aware that the
paradigms are shifting. The most recent minutes as well as recent
comments by Williams and Bullard reflect that they are evaluating
the monetary policy framework. There also appears to be a more
hawkish view from the regional presidents versus the governors in
Washington. All of this adds up to one more hike this year and then
a prudent wait and see attitude into the 1st half of 2017.
#rateslowforlongtime.
John Kattar, Ardent Asset Advisors: A hawkish tone at Jackson
Hole would be a surprise, but I do expect Yellen to focus on the
likelihood of a rate hike in the intermediate term (likely December.)
Jack Kleinhenz, NRF Chief Economist: More clarity from the Fed
about its policy formula would be constructive. The consumer
remains in a good place- rising or steady wage growth, job gains,
not over-leveraged, steady confidence with healthy balance sheets.
David Kotok, Cumberland Advisors: The LIBOR spike so far is the
same as a quarter-point hike by the Fed when measured on the
private sector. So we've had a rate hike from rule changes, not the
Fed. We will have more LIBOR spike in September; hence another
hike. LIBOR is why the Fed will wait until December.

CNBC Fed Survey – August 24, 2016
Page 28 of 31

FED SURVEY
August 24, 2016
Subodh Kumar, Subodh Kumar & Associates: Currently, capital
markets may appear mesmerized by central banks and quantitative
FED
SURVEY
ease. Evidence
emerges
of distortive effects, such as negative
30, beyond Japan but with little tangible benefit
interest rates April
now well
and with far from consistent currency movements. A confrontation in
politics appears in the U.S. election but also in Russia at its borders
and China in Asia, not to mention the depths of violence in the
Levant. A change in focus is needed from beating consensus and
towards drilling more in depth on delivery. It is on value over
momentum, restructuring over low interest rate dependence. In
asset mix, the requirements for diversification seem strong to us. We
would include alternates like precious metals or cash, and not
just look at diversification within fixed income or equities.
Guy LeBas, Janney Montgomery Scott: There's an attempt afoot
to return the Jackson Hole conference to its academic roots and
avoid the "rate hike spectacle" that it's become in the last few years.
Expect a lot of discussion on the long term--especially the concept of
equilibrium rates--but very little September versus December hints.
For good reason. The longer term matters a lot more.
Rob Morgan, Sethi Financial Group: The Fed rarely raises rates
prior to a presidential election. This year will be no different.
Chad Morganlander, Stifel Nicolaus (Washington Crossing
Advisors): The Federal Reserve will not risk unhinging the financial
system before the election. Investors should expect the Fed
message to change after November.
Joel Naroff, Naroff Economic Advisors: When you base policy on
current data that are volatile, you get volatile policy statements and
that is not a way to run anything.

CNBC Fed Survey – August 24, 2016
Page 29 of 31

FED SURVEY
August 24, 2016
James Paulsen, Wells Capital Management: The biggest impact
of the Fed meetings next week may be on the global sovereign bond
FED
market. If the
Fed SURVEY
is a bit more hawkish than anticipated, could the
30,10-year yield back above pre-Brexit levels
week end withApril
the US
while 10-year yields in both the Eurozone and Japan rise back above
zero? That is, since economic surprise indexes are recently rising
about the globe, could a more hawkish Fed leave a Jackson Hole
legacy of a bottom in "global" bond yields?
Lynn Reaser, Point Loma Nazarene University: The Fed had
always wanted to anticipate, not react, but the safe course is now to
follow the economy. Policymakers see much higher risks of moving
too early than too late.
John Roberts, Hilliard Lyons: Uncertainty around economic
policies of the presidential candidates is likely to lead to economic
and market uncertainty in the near term, and the market could stay
in a trading range as a result.
Allen Sinai, Decision Economics: The big enchilada for the Fed is
expected price inflation and achieving the 2% target in time.
Hank Smith, Haverford Investments: If we have a strong jobs
number in August the Fed will raise rates in September despite the
election
Diane Swonk, Diane Swonk & Associates: The Fed has failed to
come to a consensus on communications. The blow to credibility is
leaving markets pricing a form of infinite easing. This has helped
buoy markets through external shocks (China, Brexit) but raises
questions about how the Fed extricates itself from ultra-easy
policies. If it raises rates even a little bit in this environment, it will
likely destabilize financial markets: if it doesn't, it feeds the reach for
yield, which seeds bubbles. It is a Catch-22 that the Fed has not
been willing to admit (realize) publicly.
CNBC Fed Survey – August 24, 2016
Page 30 of 31

FED SURVEY
August 24, 2016
Peter Tanous, Lynx Investment Advisory: The effect of the
presidential election on the economy is overrated. Both Democratic
FED
SURVEY
and Republican
economic
proposals are silly in the extreme and
Aprilthe
30,
would never pass
House and Senate.
Scott Wren, Wells Fargo Investment Institute: U.S. economic
data, in our opinion, have increased confidence that the domestic
economy is not likely to stumble into a recession over the coming 12
months. We expect the SPX to have some downside volatility in the
September/October period - the market is unlikely to keep going
straight up - but we have confidence in our 2190-2290 year-end
2016 target. Any pullbacks toward the 2050 technical support area
are buying opportunities. Consumer Discretionary, Industrials,
Technology and Health Care are our overweight sectors.
Underweight the overvalued Consumer Staples, Telecom and Utilities
sectors.
Mark Zandi, Moody's Analytics: The economy continues to
perform well and its near-term prospects are good. The most serious
threat is the persistently slow potential growth. Policies that promote
more high-skilled immigration, infrastructure spending, and
educational attainment are vital to ensure stronger longer-term
growth.
Clare Zempel, Zempel Strategic: If there is a positive shock in
Jackson Hole, it could be that the Fed downplays inflation targeting
and shifts toward nominal GDP targeting, with a 4-5% rate objective
for nominal expansion.

CNBC Fed Survey – August 24, 2016
Page 31 of 31