FED SURVEY

November 1, 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 October 27-29, 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 November meeting, the Federal Reserve will:

0%

10%

Raise interest rates

0%

Lower interest rates

0%

20%

30%

0%

CNBC Fed Survey – November 1, 2016
Page 1 of 34

50%

60%

70%

80%

90%

100%

100%

Keep rates unchanged

Don't know/unsure

40%

FED SURVEY
November 1, 2016
(For the 100% answering rates would be kept unchanged)

What is the
main
reason the Fed will keep rates unchanged
FED
SURVEY
at its November
meeting?
April 30,
0%

10%

20%

30%

Upcoming presidential
election

26%

Other

8%

Low US growth

5%

Inconsistent or weak
jobs growth

3%

Don't know/unsure

3%

Global growth
concerns

0%

Uncertainty
surrounding Brexit

0%

Other:
No press conference

CNBC Fed Survey – November 1, 2016
Page 2 of 34

50%

60%

55%

Markets unprepared
for rate hike

40%

All of the above

FED SURVEY
November 1, 2016
Will the Fed signal in its November policy statement that it will
hike in December?

FED SURVEY

80%

70%

April 30,
69%

60%

50%

40%

30%

23%
20%

8%

10%

0%

Yes

CNBC Fed Survey – November 1, 2016
Page 3 of 34

No

Don't know/unsure

FED SURVEY
November 1, 2016
2. After its upcoming meeting, the Federal Reserve's next
directional move will most likely be:

FED SURVEY
April 30,

Raise interest rates

Lower interest rates

Move to negative interest rates

Launch new quantitative easing

100%

100%
94%

90%

88%

98%

95%

90%

92%

95%

Raise interest rates

80%

70%

60%

50%

40%

30%

20%

Launch new quantitative easing

10%

Lower interest rates

10%

10%

4%

5%

3%

2%

5%

0%

Jan 27

Mar 15

Apr 26

Jun 14

CNBC Fed Survey – November 1, 2016
Page 4 of 34

Jul 26

Aug 24

Sep 20

Nov 1

FED SURVEY
November 1, 2016
(For the 95% answering the next move will be to raise rates)

When will FED
the Federal
Reserve take this action?
SURVEY
April 30,
100%

90%

86%

80%

70%

60%

50%

40%

30%

20%

10%

5%
0% 0%

0%

Dec

Jan Feb
2017

5%
0% 0%

Mar

Apr

May

0% 0% 0% 0%
Jun

Jul

Aug

Sep

3%

Oct After
Oct
2017

Of the 5% answering the next move will be to raise rates, all predicted the Fed
will do so in March, 2017.

CNBC Fed Survey – November 1, 2016
Page 5 of 34

FED SURVEY
November 1, 2016
3. How many times will the Federal Reserve hike rates this year
(2016) and next year (2017)?

FED SURVEY
April 30,
0.00

0.50

2016 Hikes

1.00

1.50

2017 Hikes

2.00

Average
2.50

2.83

Dec 15 '15

2.10

Jan 26 '16

1.88

Mar 15

1.60

Survey Dates

Apr 26

1.54

Jun 14

Jul 26

Aug 24

Sep 20

Nov 1

0.86
0.95
0.98
0.87

CNBC Fed Survey – November 1, 2016
Page 6 of 34

3.00

1.97

3.50

4.00

4.50

5.00

FED SURVEY
November 1, 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%

Negative

61%
60%

58%

56%

60%

63%

60%

58%

50%

42%

40%

39%

40%

37%

40%

38%

No effect
30%

32%

20%

10%

5%
2%

3%

Apr 26

Jun 14

Positive

2%

0%

0%

Aug 24

Sep 20

3%

0%

Mar 15

CNBC Fed Survey – November 1, 2016
Page 7 of 34

Jul 26

Nov 1

FED SURVEY
November 1, 2016
5. Which would be the best presidential election outcome for the
economy?

FED SURVEY
A Democrat wins

A Republican wins

April 30,

Doesn't matter

Don't know/unsure

50%

47%
Democrat wins

45%

Republican Wins
40%

46%

43%

40%
37%

38%

37%

35%

36%

35%

33%
30%

26%

30%

28%
26%

25%

Don't know/unsure

23%

23%

24%
20%

18%

15%

16%

21%

15%

10%

11%

10%
9%

8%

5%

8%
5%

Doesn't matter

0%

Mar 15

Apr 26

Jun 14

Jul 26

Aug 24

Sep 20

Nov 1

Note: Starting with the question in the August survey ‘Republican wins’ was changed to ‘Trump wins’ and
‘Democrat wins’ was changed to ‘Clinton wins’

CNBC Fed Survey – November 1, 2016
Page 8 of 34

FED SURVEY
November 1, 2016
6. Which candidate has best economic policies?
Clinton
FED SURVEY
60%

Trump

Don't know/unsure

April 30,

49%

50%

45%

46%

44%

42%

40%

38%
40%

30%

30%
25%

32%

31%

24%

20%

21%

18%
16%
10%

0%

Jun 14

Jul 26

CNBC Fed Survey – November 1, 2016
Page 9 of 34

Aug 24

Sep 20

Nov 1

FED SURVEY
November 1, 2016
Which candidate would be best for the stock market?

FEDClinton
SURVEYTrump

Don't know/unsure

April 30,

70%

62%
60%

53%
50%

47%

38%

40%

38%
31%

32%

30%

26%
25%

22%

20%

21%

21%
16%

10%

0%

Jun 14

Jul 26

CNBC Fed Survey – November 1, 2016
Page 10 of 34

Aug 24

Sep 20

Nov 1

FED SURVEY
November 1, 2016
7. Who is most likely to win this year's presidential election?…
Clinton
FED SURVEY

90%

Trump

April 30,
80%

Don't know/unsure

84%

82%

80%

80%

70%

60%

52%

50%

51%

40%

30%

26%

20%

13%

15%

21%

26%

23%

11%
11%

10%

7%
0%
Apr 26

5%
Jun 14

Jul 26

CNBC Fed Survey – November 1, 2016
Page 11 of 34

8%

5%
Aug 24

Sep 20

Nov 1

FED SURVEY
November 1, 2016
8. Where do you expect the S&P 500 stock index will be on … ?
December 31, 2016

December 31, 2017

FED SURVEY
2,350

2311
2,300

April 30,
2296

2,250

2247

2293

2259

2275
2254

2166

2158

2149

2159

2,100

2114

2140

2107

2,050

2,000

2000
1,950

1,900

1,850

1,800

Survey Dates

CNBC Fed Survey – November 1, 2016
Page 12 of 34

2088
2035

2255

2196 2242
2183
2174

2200

2,200

2,150

2234

2223

2249
2244

2160

FED SURVEY
November 1, 2016
9. 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%

2.88%
2.83%

3.04%
2.89%

2.5%

3.09%

2.88%

2.67%

2.58%

2.67%
2.51%

2.54%
2.24%

2.34%

2.28%
2.25%
2.26%

2.11%
2.10%

2.0%

1.75%

1.5%

1.0%

Survey Dates

CNBC Fed Survey – November 1, 2016
Page 13 of 34

1.91%
1.78%
1.76%

FED SURVEY
November 1, 2016
10.
?

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%

Dec 31, 2019

2.22%

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%
1.81%

1.49%

1.41%
1.46%

1.43%
1.17%

1.22%
1.18%

1.12%

1.0%

0.78%

0.74%

0.61% 0.61%
0.59%

0.5%

0.0%

1.09%

0.88%
0.84%

0.91% 0.90%
0.85%

0.000

CNBC Fed Survey – November 1, 2016
Page 14 of 34

1.16%

0.59%

FED SURVEY
November 1, 2016
11.
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%

3.04%

3.06%
2.98%

2.79%
2.85%

2.5%

2.73%

2.65%
2.69%
2.65%
2.64%
2.58%
2.56%

2.48%

2.42%
2.29%

2.0%

Survey Dates

CNBC Fed Survey – November 1, 2016
Page 15 of 34

2.44%

FED SURVEY
November 1, 2016
12.

When do you believe fed funds will reach its terminal rate?

FED SURVEY

Survey Date

April 30,

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

Sep 20 survey

Q4 2018

Nov 1 survey

Q1 2019

CNBC Fed Survey – November 1, 2016
Page 16 of 34

Forecast

FED SURVEY
November 1, 2016
13.
What is your forecast for the year-over-year percentage
change in real U.S. GDP for …?

FED SURVEY

2016

April 30,

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%

+2.31%

2.2%

+2.17%

+2.24%

+2.21%

+2.14%

+2.28%

+2.25% +2.26%

+2.08%

+2.16%

+2.05%

2.0%
+1.88%

+1.95%

1.8%

+1.82%

1.6%
Dec
16

Jan
27,
'15

Mar
17

April
Jun 16 Jul 28
28

Sept
Oct 27
16

Dec
15

Jan 26
'16

Mar
15

Apr 26 Jun 14 Jul 26

Aug
24

+1.81%

Sep
20

Nov 1

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 +1.82 +1.81
2017

CNBC Fed Survey – November 1, 2016
Page 17 of 34

+2.43 +2.31 +2.41 +2.21 +2.25 +2.26 +2.24 +2.28 +2.16

FED SURVEY
November 1, 2016
14.
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%

2.0%

2.20%

2.12%

2.12%

2.07%

2.13%

2.09%

2.07%

1.96%

2.02%

1.89%
1.88%

1.8%

2.16%

1.72%

1.75%

1.75%
1.66%

1.6%

1.55%
1.57%

1.50%
1.4%

1.45%

1.2%

1.0%

Survey Dates

CNBC Fed Survey – November 1, 2016
Page 18 of 34

1.51%

FED SURVEY
November 1, 2016
15.
When do you expect the Fed to allow its balance sheet to
decline?

FED0% SURVEY
5%
April 30,

Nov

10%

0%

Jan '17

0%

Feb

0%

Mar

0%

Apr

0%

May

0%

Jun
0%

Sep

0%

Oct

0%

Nov

0%

Dec

8%

Jan '18

5%
0%

Mar

5%

Apr

3%

0%

Jun

5%

Jul

3%

Aug

0%

Sep

0%

Oct

0%

Nov

0%
5%

2019 or later
Never

CNBC Fed Survey – November 1, 2016
Page 19 of 34

30%

11%

Aug

Dec

25%

3%

Jul

May

20%

3%

Dec

Feb

15%

30%
19%

35%

FED SURVEY
November 1, 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%
0%
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%
16%
27%

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%
11%
8%

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%
3%
0%

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%
0%
3%

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%
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%
0%
8%

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

41%
28%
28%
22%
29%
45%
41%
44%
44%
33%
36%
28%
22%
31%
30%
32%

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

3%
0%
0%
0%
0%
0%
3%
5%
0%

3%
7%
5%
7%
6%
5%
0%

13%
7%
14%
8%
5%

“Other” responses:


Bad policy mix/too dependent on monetary policy
Old age for this expansion, and baby boom pessimism, saving not spending as they
head into retirement
Risk of corrupt government under the Clinton gang

CNBC Fed Survey – November 1, 2016
Page 20 of 34

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%
11%
8%

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

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
Sep 20
Nov 1

Tax/
regulatory policies

April 30,

Geopolitical risks

European recession/
financial crisis

FED SURVEY

Rise in interest rates

16.
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%
0%
0%

FED SURVEY
November 1, 2016
17.
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,

Survey Dates

10%
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
Sep 20
Nov 1

15%

20%

25%

35%

40%

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%
16.4%
14.7%
15.1%
17.4%
18.6%

CNBC Fed Survey – November 1, 2016
Page 21 of 34

30%

22.1%
22.9%
28.8%
24.1%
24.4%
21.1%
23.5%
22.2%
21.6%
25.3%
23.2%

FED SURVEY
November 1, 2016
18.
Will the election play a significant role in the Fed's
decisionFED
on interest
rates this month?
SURVEY
April 30,
60%
54%
50%

41%
40%

30%

20%

10%

5%

0%

Yes

CNBC Fed Survey – November 1, 2016
Page 22 of 34

No

Don't know/unsure

FED SURVEY
November 1, 2016
(Of the 54% who said the election would be a factor)

How does FED
the election
factor into the Fed's decision?
SURVEY
0%
20%
40%
60%
80%
April 30,

Fed will hike to help Trump

Fed will not hike to help Clinton

0%

5%

Fed will be deterred from hiking
when it otherwise would because
it doesn't want to be seen as
influencing the election

Other

Don't know/unsure

100%

90%

5%

0%

Other:

The Fed does not want to rock the boat one week before the election. They can wait one
more month.

CNBC Fed Survey – November 1, 2016
Page 23 of 34

FED SURVEY
November 1, 2016
19.

At this point in the economy, low interest rates:

FED SURVEY

60%

April 30,

50%

40%

35%
32%

32%

30%

20%

10%

0%

0%

Help the
economy more
than they hurt

Hurt the
economy more
than they help

CNBC Fed Survey – November 1, 2016
Page 24 of 34

Have little effect
on the economy

Don't
know/unsure

FED SURVEY
November 1, 2016
(Of the 32% who said low rates help the economy. Respondents
could choose more than one option)

FED SURVEY

Low interest
rates
April
30, help the economy by:
0%

20%

40%

60%

Helping borrowers, even though
it's at the expense of savers

100%

83%

Creating a preference for riskier
investments over safe
investments

58%

Propping up asset markets

58%

Spurring greater capital
investment

42%

17%

Other

Don't know/unsure

80%

0%

Other:

Correctly reflecting the low
natural rate of interest

CNBC Fed Survey – November 1, 2016
Page 25 of 34

Shifting consensus on
infrastructure investment

FED SURVEY
November 1, 2016
(Of the 32% who said low rates hurt the economy. Respondents
could choose more than one option)

FED SURVEY

Low interest
rates
April
30, hurt the economy by:
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Misallocating capital in the
economy

75%

67%

Creating asset bubbles

Benefiting borrowers at the
expense of savers

58%

42%

Other
Creating a preference for riskier
investments over safe
investments
Don't know/unsure

33%

0%

Other:


Boosting saving behavior of
near retirees
Forcing people to save more to
fund their future retirements
Induce firms to borrow to buy
back stock instead of investing
in their companies

CNBC Fed Survey – November 1, 2016
Page 26 of 34

Reducing long-term investment
because ultra-low rates raise
fears of what will happen when
this unsustainable policy ends
Shows lack of confidence by
Fed in economy

FED SURVEY
November 1, 2016
Fed Chair Janet Yellen recently speculated whether, after a
deep recession, there could be some benefit to temporarily
SURVEY economy," with robust aggregate
running a FED
"high-pressure
April
30, labor market.
demand and
a tight
20.
Should the Fed right now run a "high-pressure"
economy?
0%

10%

20%

30%

40%

50%

60%

70%

80%

70%

80%

49%

Yes

43%

No

8%

Don't know/unsure

21.
Do you believe Yellen signaled her intentions
through this comment to run such an economy?
0%

10%

20%

30%

19%

No

16%

CNBC Fed Survey – November 1, 2016
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50%

60%

65%

Yes

Don't know/unsure

40%

FED SURVEY
November 1, 2016
22.

What is your primary area of interest?

FED SURVEY

Currencies
0% 30,
April

Other
11%

Fixed
Income
11%
Equities
24%

Economics
55%

Comments:
Dean Baker, Center for Economic and Policy Research: Given
weak price pressures and slow economic growth, there is little
reason for the Fed to raise interest rates in the immediate future.
Jim Bianco, Bianco Research: By trying to not be political and
refraining from a hike in November, the Fed is in fact being political
and making criticism that they are political valid.

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FED SURVEY
November 1, 2016
Thomas Costerg, Standard Chartered Bank: Many Fed members
have indicated they intend to hike rates in December, but a rate hike
SURVEY
then is not setFED
in stone,
in our view. It could still be derailed by
April
30,
weaker US data
or events
abroad. The rising US dollar could also
raise alarm bells among Fed doves; Governor Brainard in particular
could come out of the woodworks and raise the strong dollar as a red
flag. That said, the doves could trade a Dec rate hike against the
promise a very shallow 2017 tightening path, in other words the Dec
rate hike could end up being just 'symbolic' and to save face.
Neil Dutta, Renaissance Macro Research: With inflation rising,
real interest rates have declined, indicating an easy stance of policy.
At the same time, fiscal policy is set to be a modest push to growth
in 2017. This is bullish for US growth, inflation and employment.
Robert Fry, Robert Fry Economics: I still believe that low oil
prices are good for economic growth over the long haul, but the
benefits have been masked so far by the short-run hit to drilling
activity and an inventory correction. With the inventory correction
over and the long-run benefits of low oil prices starting to exceed the
short-run costs, growth is accelerating. (But it won't accelerate very
much for very long without tax reform and regulatory simplification.)
Kevin Giddis, Raymond James Financial: The FOMC appears to
have the market's green light to raise rates. When it occurs, it will be
on the Fed to explain why it was necessary.
Stuart Hoffman, PNC Financial Services Group: The U.S.
average gasoline price in late-October is above its year earlier level
for the first time since early-July 2014. The "gift" of lower
energy/gasoline prices holding down headline inflation well below
core inflation for the past 2 years is coming to an end. The FOMC is
close to achieving its dual mandate!

CNBC Fed Survey – November 1, 2016
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FED SURVEY
November 1, 2016
Art Hogan, Wunderlich Securities: There appears to be a real
possibility that in 2017 we may actually see some initial hand off
FED
SURVEY
from monetary
policy
to fiscal policy That would be a significant
April
30,
positive and long
overdue
John Kattar, Ardent Asset Advisors: This tightening cycle will
happen by non-traditional means, likely raising IOER rather than
shrinking the balance sheet. I'm not sure anyone has thought
through what that means for the economy and markets, but I have a
feeling it's a very important question.
Jack Kleinhenz, NRF Chief Economist: More clarity from the Fed
about what policy formula they are truly following would be
constructive. The economy is near full employment and inflation is
slowly drifting upward. Based on the data it’s time to begin to make
moves.
David Kotok, Cumberland Advisors: A December hike is widely
anticipated. The Fed will deliver a negative surprise if it fails to hike a
quarter point in December.

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FED SURVEY
November 1, 2016
Subodh Kumar, Subodh Kumar & Associates: An issue for
investors today is whether too much QE has been in place for too
FED
SURVEY
long. Distortions
have
emerged in assets, between borrowers and
30, demographics. Interest rates need to
savers as wellApril
as within
measuredly increase to provide policy reserves. We favor quality
despite performance of low-quality debt. Renewed M&A shows the
stress on companies. Divergence exists between revenue and
earnings in the ongoing corporate releases. Low interest rates do not
in themselves boost business investment. Equity valuation should
not be not solely be a function of low rates. Present levels lead us to
stress quality. For capital markets, the performance of the financials
is critical. Geopolitical flux, U.S. elections and the party plenary in
China could affect policy for years. Trade agreements seem under
pressure as seen over TPP and CETA . Diversification including
precious metals seems needed.
Guy LeBas, Janney Montgomery Scott: Right now, the onus is on
the markets and the economic data to disprove the base case of a
December 25bps rate hike. Longer term, the risk of recession in
2017 remains significant, as consumer income gains can't last
forever with the unemployment rate at 5% and corporate profits
stagnant. If that happens, we'll be right back to the zero lower
bound before most market participants start thinking about stimulus.
Donald Luskin, Trend Macrolytics: It’s hilarious that Yellen
thinks, at this point, she has the power to wave a magic wand and
"run a high-pressure economy." Demonstrably the only thing she can
run is her mouth.
Rob Morgan, Sethi Financial Group: The Fed never wants to be
seen as an influencer of a presidential election. They won't raise
rates at the November meeting.

CNBC Fed Survey – November 1, 2016
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FED SURVEY
November 1, 2016
Joel Naroff, Naroff Economic Advisors: While it might be nice to
run a high-pressure economy, how you actually get there is not clear
FED
SURVEY
since low rates
are not
doing the job.
April 30,
Lynn Reaser, Point Loma Nazarene University: While December
would appear to be a patch of calm water, allowing the Fed to steer
rates higher, new risks seem to always get in the way. One possible
storm could be that the government again will run out of money on
December 9 unless the post-election Congress throws another
lifeline.
John Roberts, Hilliard Lyons: Our year-end S&P target continues
to be 2190, with strong Q3 earnings pushing the market higher,
while uncertainty around the political situation and Fed push the
market down into yearend.
Chris Rupkey, Bank of Tokyo-Mitsubishi: Jump, the end is near.
John Ryding, RDQ Economics: Monetary policy is doing nothing to
stimulate economic growth at this point but it is promoting resource
misallocation, risky investment behavior (but masking that risk by
promoting low volatility) and hurting the largest generation of
retirees.
Allen Sinai, Decision Economics: Economy looks good. Inflation
starting to move up and noticeably so.

CNBC Fed Survey – November 1, 2016
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FED SURVEY
November 1, 2016
Diane Swonk, Diane Swonk & Associates: The division over the
risks of low rates rises to the top of the Fed, with Chair Yellen
FED
SURVEY
believing more
can be
done with low rates to cure what ails us, and
Apriltaking
30, the opposing side; he believes the Fed has
Vice Chair Fischer
done all it can. That said, the differences are in theory, not ideology
like we see in the election. This is a real mistake people make; they
think the politics of the Fed mirrors those of the rest of Washington.
It is apples and oranges, or worse kale versus fries. One represents
healthy debate, another is decadent and could shorten your life
span. Also, no one seems to be handicapping the composition of the
Fed under the next Congress, and whether it is staffed at all. The
extremes of both parties have attacked Chair Yellen and threatened
the Fed's independence. Who gets through the nomination process
would be one way for partisans to influence the Fed.
Mark Vitner, Wells Fargo: Yellen's high-pressure economy
comments provide the Fed some political cover for when they do
raise interest rates. The Fed is very sensitive to concerns of those
not yet benefitting from the economic recovery and income
inequality concerns in general. They will partly address these
concerns by raising interest rates more slowly than they would have
in past cycles and by repeatedly stressing that rates will remain low
for some time to come.

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FED SURVEY
November 1, 2016
Scott Wren, Wells Fargo Investment Institute: The S&P 500
likely will see its high for next year around the middle portion of the
SURVEY
year based onFED
our work.
We think this high will be at or near the top
April 30,year-end 2017 target range. We see the
end of our 2190-2290
market tailing off in the second half of the year and basically ending
flat on a December-to-December basis. In terms of the election, in
our opinion, whoever is the next President will have little if any
chance of changing the trajectory of the economy over the first 12 or
even 18 months that he/she is in office. The market knows this and
will quickly get back to trading off of what the outlook for the
economy and earnings are over the next 6-12 months. We do not
see the "election effect" lasting more than a month or so...maybe
into mid-December.

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