You are on page 1of 34

FED SURVEY

May 1, 2018
These survey results represent the opinions of 37 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 April 26-28, 2018. 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. At its May meeting, the Federal Reserve will:

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Raise interest
rates 11%

Lower interest
rates 0%

Keep rates
unchanged 89%

Don't know/
unsure 0%

CNBC Fed Survey – May 1, 2018
Page 1 of 34
FED SURVEY
May 1, 2018

2. After its upcoming meeting, the Federal Reserve's next
directional move will most likely be:
Raise interest rates Lower interest rates
Move to negative interest rates Launch new quantitative easing
100%
100%
100% 100% 100%
98% 98%
95% 95%
94%
90% 92%
90%
88%
Raise interest rates: 100%

80%

70%

60%

50%

40%

30%

20% Lower interest rates: 0%

10% 10%
Launch new quantitative easing: 0%
10%
5% 5%
4%
3% 2% 2% 2% 2%
0% 0%
0%
Jan Mar Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep Oct Dec Jan Mar May 1
27 '16 15 26 14 26 24 20 1 13 31 '17 14 2 13 25 19 31 12 30 '18 20

CNBC Fed Survey – May 1, 2018
Page 2 of 34
FED SURVEY
May 1, 2018

(For the 100% answering the next move will be to raise rates)

When will the Federal Reserve take this action?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Jun 86%

Jul 5%

Aug 3%

Sep 5%
Average:
Oct 0%
June
2019
Nov 0%

Dec 0%

Jan '19 0%

Feb 0%

Mar 0%

After
Mar '19 0%

CNBC Fed Survey – May 1, 2018
Page 3 of 34
FED SURVEY
May 1, 2018

3. How many times in total will the Federal Reserve hike
rates (assuming 25-basis point increases) in …?

2018 hikes 2019 hikes

4.00

3.50

3.45 3.46

3.21
3.00

2.86 2.84
Average

2.50 2.63
2.48 2.49
2.39
2.26
2.00

1.50

1.00
Sep 19 Oct 31 Dec 12 Jan 30 Mar 20 May 1
Survey Dates

Note: Three percent of respondents said the Fed will cut rates in 2019.

CNBC Fed Survey – May 1, 2018
Page 4 of 34
FED SURVEY
May 1, 2018

4. Which of the following statements most closely aligns
with your view on the recent market pullback?

Mar 20 May 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

A healthy
part of the 60%
market cycle;
we're past
the worst 65%
of it

A red
flag for 30%
the markets;
expect more
sell offs
27%

10%
Don't know/
unsure
8%

CNBC Fed Survey – May 1, 2018
Page 5 of 34
FED SURVEY
May 1, 2018

5. How has the recent market volatility influenced your
views on stocks?

Mar 20 May 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

8%
More
bullish
11%

73%
Unchanged
73%

20%
More
bearish
16%

Don't 0%
know/
unsure 0%

CNBC Fed Survey – May 1, 2018
Page 6 of 34
FED SURVEY
May 1, 2018

6. Do you generally approve or disapprove of the job
President Trump is doing handling the economy?

Mar 20 May 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Strongly 13%
approve
8%

45%
Approve
49%

20%
Neutral
19%

18%
Disapprove
16%

Strongly 5%
disapprove
8%

CNBC Fed Survey – May 1, 2018
Page 7 of 34
FED SURVEY
May 1, 2018

7. At the end of April , the U.S. economic expansion will
have been underway for 106 months, TYING it for the
second-longest expansion ever. Will it continue another
15 months to SURPASS 120 months, making it the
longest expansion on record?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Yes 81%

No 11%

Don't
know/ 7%
unsure

CNBC Fed Survey – May 1, 2018
Page 8 of 34
FED SURVEY
May 1, 2018

8. Relative to the current monetary policy of the FOMC,
would you say Richard Clarida, nominated to be vice
chairman of the Fed, is?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

More
dovish 3%

Neutral 65%

More
hawkish 16%

Don't
know/ 16%
unsure

CNBC Fed Survey – May 1, 2018
Page 9 of 34
FED SURVEY
May 1, 2018

9. Relative to the current monetary policy of the FOMC,
would you say Michelle Bowman, nominated to be a
Federal Reserve governor, is?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

More
dovish 5%

Neutral 51%

More
hawkish 0%

Don't
know/ 43%
unsure

CNBC Fed Survey – May 1, 2018
Page 10 of 34
FED SURVEY
May 1, 2018

10. Please rate the following on how big a role each has
played in the recent rise in interest rates?
1=Very small impact, 2=Small impact, 3=Moderate impact,
4=Large impact, 5=Very large impact

0.00 1.00 2.00 3.00 4.00 5.00

Higher
inflation 3.27
concerns

Faster
growth 3.19
outlook

Fed rate
hikes and
balance 2.78
sheet
reduction

More
Treasury
supply/ 2.76
bigger
deficits

CNBC Fed Survey – May 1, 2018
Page 11 of 34
FED SURVEY
May 1, 2018

11. How will the recent rise in interest rates affect U.S.
economic growth relative to the effect of the tax cuts
enacted by Congress late last year?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Net slower growth
(Negative effect of
interest rates will be 8%
greater than positive
effect of tax cuts)

Offsetting
(Negative effect of
interest rates will be
the same as 22%
positive effect
of tax cuts)

Net faster growth
(Negative effect of
interest rates will
be smaller than 67%
positive effect
of tax cuts)

Don't know/
unsure 3%

CNBC Fed Survey – May 1, 2018
Page 12 of 34
FED SURVEY
May 1, 2018

12. How would you view a U.S. exit from the North
American Free Trade Agreement?

Mar 20 May 1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Very 48%
negative 49%

33%
Negative
41%

15%
Neutral
5%

3%
Positive
0%

Very 0%
positive 0%

Don't 3%
know/
unsure 5%

CNBC Fed Survey – May 1, 2018
Page 13 of 34
FED SURVEY
May 1, 2018

13. In general, how do you view the Trump
administration's trade policies?

Jan 30 Mar 20 May 1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Positive 16%
for U.S.
economic 3%
growth 3%

Neutral 8%
for U.S.
economic 13%
growth 8%

Negative 55%
for U.S.
economic 63%
growth 58%

Too soon
to tell 21%
the impact
on U.S. 23%
economic 31%
growth

CNBC Fed Survey – May 1, 2018
Page 14 of 34
FED SURVEY
May 1, 2018

14. Where do you expect the S&P 500 stock index will
be on … ?

December 31, 2018 December 31, 2019

3,200

3005
3,000
2928
2879
2937
2862

2,800 2839

2775 2787

2708

2,600

2588 2593
2555 2564 2562

2480
2,400 2453

2,200

2,000

1,800
Dec Jan Mar May Jun Jul Sep Oct Dec Jan Mar May
13 31 14 2 13 25 19 31 12 30 20 1
2017 2018
Survey Dates

CNBC Fed Survey – May 1, 2018
Page 15 of 34
FED SURVEY
May 1, 2018

15. What do you expect the yield on the 10-year
Treasury note will be on … ?

December 31, 2018 December 31, 2019

4.0%

3.54%3.54%
3.5% 3.44%3.43% 3.44%
3.37%

3.22% 3.24% 3.24%
3.17%
3.05%3.03% 3.06% 3.07%
2.95%
3.0%

2.84%

2.5%

2.0%

1.5%

1.0%
Dec Jan Mar May Jun Jul Sep Oct Dec Jan Mar May
13 31 14 2 13 25 19 31 12 30 20 1
2017 2018
Survey Dates

CNBC Fed Survey – May 1, 2018
Page 16 of 34
FED SURVEY
May 1, 2018

16. Is the flattening yield curve a warning signal about a
coming recession?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Yes 25%

No 67%

Don't
know/ 8%
unsure

17. Please briefly list the factor or factors most
responsible for the flattening yield curve.

• Twos are reacting to the Fed, tens • Foreign capital flows limiting rise in
are moving on global growth - new long rates
supply too focused on short end of • Fed raising rates
curve • The Fed is hiking too much. The 10-
• Poor inflation expectations for long year/3-month curve is what matters.
term It was 400 bps 5 years ago, now 100
• Longer end is sucked downward due bps. That is still steep but heading
to ECB low rate policy lower. Too early to say it is signaling
• Markets are adjusting to reality of a recession but headed in that
inflation returning. Have yet to fully direction.
price in the boost to long-term rates • Low term premium
associated with rising deficits and • It is natural that the yield curve
debt flattens with the tightening cycle. The
• A combination of the Fed raising "recession" signal only comes with
short-term rates and a slower than inversion, and we are far from there.
expected growth of inflation.

CNBC Fed Survey – May 1, 2018
Page 17 of 34
FED SURVEY
May 1, 2018
• Fed determined to hike short rates; • There is more certainty that the
market skepticism that longer term Federal Reserve is going to raise
growth will be robust short-term rates than there is that
• Fed raising short-term rates the economy will continue to grow at
• Foreign demand for Treasury a 3 percent pace in 2018 and 2019.
securities, inflation still low • Fed tightening
• Faster nominal GDP growth: • Foreign investors attracted to higher
increasing supply to finance bigger U.S. bond yields; belief that Fed will
deficit curb inflation; rising U.S. federal debt
• Global quantitative easing • It pays to flatten the curve when the
• -Tightening US monetary policy Fed is in a rate hike cycle since most
- Global QE which weighs on long- put us into recession.
term rates • Tighter Fed and lower inflation.
• Supply, GDP growth, inflationary • Fed funds rate increases
expectations • Increase in fed funds rate lowering
• Pressure on short rates due to Fed short end, while continued demand
current and expected policy for longer bonds and low
• Fed needs catch up on admin rates; international sovereign rates keeping
narrow risk premiums in fixed income down the long end.
• The supply of Treasury issuance to • In line with history, the yield curve is
finance the deficits, particularly the flattening as the Fed raises short-
flood of Treasury bills. Sharp rise in term rates amid a tightening cycle.
LIBOR a contributing factor. • Markets are underestimating the
• A flattening curve reflects the amount by which the Fed will raise
probability of recession. As markets rates.
begin to price in the potential for Fed • 1. Fed not shrinking balance sheet
rate cuts into the next recession (be fast enough. 2. Markets starting to
it late-2019 or 2020), the curve will believe Fed about future rate hikes.
naturally invert. But note that flattening is from 2
• Confusion over the effect of rising years to 10 years, not from fed funds
short-term rates. Higher long-term rate to 2 years. Spread between FFR
rates will follow and the curve will and 10-year is still wider than
revert to the slope that God always average, far from recession signal.
intended it should be. • Rate hikes that are too rapid - and
• Nearing full employment as reflected headed too high- for current
in rising prices and wages circumstances (growth and inflation)
• Fed policy and Treasury supply • Two factors: 1) Short end influence
by Fed adjustment. 2) Long End
influenced by European sovereign
bonds.

CNBC Fed Survey – May 1, 2018
Page 18 of 34
FED SURVEY
May 1, 2018

18. Where do you expect the fed funds target rate will
be on … ?
Dec 31, 2018 Dec 31, 2019 Dec 31, 2020

3.5%

2.86% 2.87%
3.0% 2.90%

2.73% 2.70% 2.67%
2.67% 2.70% 2.68% 2.85%
2.60%
2.56%
2.49% 2.87%
2.80%
2.5%
2.54%
2.29%
2.25% 2.42% 2.24% 2.23%
2.17% 2.19%
2.22% 2.15% 2.14%
2.07%
2.10% 2.03%
2.0% 1.87% 2.06%
2.06%
1.81% 2.02%

1.78%
1.69%
1.5%

1.0%

0.5%

0.0%
Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep Oct Dec Jan Mar May
26 14 26 24 20 1 13 31 14 2 13 25 19 31 12 30 20 1
2017 2018

CNBC Fed Survey – May 1, 2018
Page 19 of 34
FED SURVEY
May 1, 2018

19. At what fed funds level will the Federal Reserve stop
hiking rates in the current cycle? That is, what will be the
terminal rate?
4.0%

3.5%

3.30%
3.24%
3.20% 3.21%
3.17%
3.11% 3.18%
3.06%
3.16%
2.98% 2.95%
3.0% 3.04% 2.94%
2.92%
2.85% 2.94%
2.91%
2.85%2.79% 2.73% 2.80%
2.65%
2.69%
2.65% 2.64% 2.66%
2.58% 2.48%
2.5% 2.56%

2.42% 2.44%

2.29%

2.0%
Sep 16
Oct 28

Sept 16
Oct 27

Sep 20
Jan 26 '16

Sep 19
Jan 27, '15
Mar 17

Jun 16

Mar 15

Jun 14

Jan 31 '17

Oct 31

Jan 30 '18
Jul 28

Jul 26

Mar 14

Jun 13
Aug 20

Jul 25

Mar 20
Apr 28

Aug 25

Apr 26

Aug 24
Dec 16

Dec 15

Dec 13
Nov 1

May 2

Dec 12

May 1

Survey Dates

CNBC Fed Survey – May 1, 2018
Page 20 of 34
FED SURVEY
May 1, 2018

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

2017 2018 2019
Survey date
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Aug 20, 2014 Q4
Sept 16 Q3
Oct 28 Q4
Dec 16 Q1
Jan 27, 2015 Q1
Mar 17 Q4
Apr 28 Q1
June 16 Q1
July 28 Q2
Aug 25 Q3
Sept 16 Q1
Oct 27 Q3
Dec 15 Q1
Jan 26, 2016 Q2
Mar 15 Q3
Apr 26 Q4
Jun 14 Q4
Jul 26 Q4
Aug 24 Q4
Sept 20 Q4
Nov 1 Q1
Dec 13 Q2
Jan 31, 2017 Q2
Mar 14 Q2
May 2 Q2
June 13 Q2
Jul 25 Q2
Sep 19 Q2
Oct 31 Q3
Dec 12 Q3
Jan 30, 2018 Q3
Mar 20 Q3
May 1 Q3

CNBC Fed Survey – May 1, 2018
Page 21 of 34
FED SURVEY
May 1, 2018

21. What is your forecast for the year-over-year
percentage change in real U.S. GDP for …?
2018 2019

3.0%
2.94%

2.85%
2.82%
2.85%
2.8% +2.76%
+2.75%
2.76%

2.72%
2.61% 2.70%
+2.62% 2.66%
2.6% 2.60%

+2.58%

2.4% +2.45% 2.45%

2.2%

2.0%

1.8%
Jan 31 Jan 30
Dec 13 Mar 14 May 2 Jun 13 Jul 25 Sep 19 Oct 31 Dec 12 Mar 20 May 1
'17 '18
2018 +2.76% +2.75% +2.62% +2.58% +2.45% 2.45% 2.60% 2.61% 2.85% 2.94% 2.76% 2.82%
2019 2.85% 2.70% 2.72% 2.66%

CNBC Fed Survey – May 1, 2018
Page 22 of 34
FED SURVEY
May 1, 2018

22. What is your forecast for the year-over-year
percentage change in the headline U.S. CPI for …?
2018 2019

2.8%

2.64%

2.6% 2.57%
2.54%
2.50%
2.48%
2.44%
2.41%
2.4%
2.38% 2.45%

2.28% 2.32% 2.32%
2.30%
2.2%
2.23%

2.15% 2.14%

2.0%

1.8%

1.6%
Dec Jan Mar May Jun Jul Sep Oct Dec Jan Mar 20 May 1
13 31 14 2 13 25 19 31 12 30
2017 2018
Survey Dates

CNBC Fed Survey – May 1, 2018
Page 23 of 34
FED SURVEY
May 1, 2018

23. What is the single biggest threat facing the U.S.
economic recovery? (Percentage points)

Outcome of US presidential election
European recession/financial crisis

Terrorist attacks in the U.S.

Protectionist trade policies

Overvaluation of equities
Tax/regulatory policies

Trump's temperament
Global econ weakness
Rise in interest rates

Don't know/unsure
Immigration policy

Fed policy mistake
Slow wage growth
Geopolitical risks
Slow job growth

Debt ceiling
Deflation
Inflation

Deficits

Other
Survey Date
Apr 30 2 3 2 1
‘13 0 1 0 0 2 2 1 0
1 2 2 1
Jun 18 5 8 0 3 3 0 3 0
3 2 1 1
Jul 30 8 0 2 0 2 2 0 4 4
2 2 1
Sep 17 4 7 2 2 0 4 8 7 2
2 2 1
Oct 29 8 9 4 3 3 3 8 3 0
3 2 1
Dec 17 5 2 9 2 0 2 5 2 2
Jan 28 2 3 1 2
'14 7 1 0 2 0 0 2 1 0
1 2 2 1
Mar 18 0 3 6 3 5 0 5 8 0
2 2 1 1
Apr 28 3 6 1 3 5 0 8 8 3 0
1 2 1 1 1 1
Jul 29 2 9 2 6 3 0 2 2 2 3
2 2 1 1
Sep 16 6 6 9 6 3 0 6 1 1 3
3 1 1 1
Oct 28 1 8 5 3 3 0 0 8 8 3
4 1 1 1
Dec 16 0 4 4 3 6 0 3 4 3 0
Jan 27 1 1 4 1
'15 0 3 9 0 0 0 6 6 1 6 6 0

CNBC Fed Survey – May 1, 2018
Page 24 of 34
FED SURVEY
May 1, 2018

Outcome of US presidential election
European recession/financial crisis

Terrorist attacks in the U.S.

Protectionist trade policies

Overvaluation of equities
Tax/regulatory policies

Trump's temperament
Global econ weakness
Rise in interest rates

Don't know/unsure
Immigration policy

Fed policy mistake
Slow wage growth
Geopolitical risks
Slow job growth

Debt ceiling
Deflation
Inflation

Deficits

Other
Survey Date
1 2 1 1
Mar 17 6 4 0 3 6 0 6 8 8 7 4 0
1 1 2 1
April 28 3 1 8 3 0 0 6 1 8 8 9 3
1 1 2 2 1
Jun 16 3 7 3 0 0 0 4 5 2 6 1 0
2 1 2
Jul 28 6 1 9 0 0 0 2 6 9 9 9 0
1 4 1
Sept 16 0 6 2 0 4 0 0 8 5 8 4 2
1 4 1
Oct 27 0 8 5 3 8 0 8 3 1 0 5 0
1 1 4 1
Dec 15 0 0 5 0 0 0 8 0 4 5 3 5 0
Jan 26 1 4 2
'16 0 0 5 0 3 0 0 5 4 8 0 3 3
2 3 2
Mar 15 5 1 3 0 0 0 5 5 3 5 0 3 1 0
2 3 1
Apr 26 0 2 2 2 2 0 0 7 6 9 0 7 1 2
2 2 1 1
Jun 14 0 8 5 3 0 0 3 0 8 8 0 5 3 0 0
2 1 2
Jul 26 2 0 7 2 2 0 2 0 2 7 0 7 7 7 2
1 3 1 1
Aug 24 3 9 3 3 0 0 3 3 1 3 3 6 4 1 0
1 1 3 1
Sep 20 0 6 1 3 0 0 0 3 0 8 5 5 8 1 0
2 3
Nov 1 3 7 8 0 3 0 8 3 2 3 0 0 5 8 0

CNBC Fed Survey – May 1, 2018
Page 25 of 34
FED SURVEY
May 1, 2018

Outcome of US presidential election
European recession/financial crisis

Terrorist attacks in the U.S.

Protectionist trade policies

Overvaluation of equities
Tax/regulatory policies

Trump's temperament
Global econ weakness
Rise in interest rates

Don't know/unsure
Immigration policy

Fed policy mistake
Slow wage growth
Geopolitical risks
Slow job growth

Debt ceiling
Deflation
Inflation

Deficits

Other
Survey Date
1 2
Dec 13 5 9 2 7 0 0 7 7 9 0 2 7 8 5 2
Jan 31 1 1 5 1
'17 0 5 3 3 0 0 0 3 0 5 0 0 0 1 0 0 0
4 1
Mar 14 0 7 2 2 0 0 0 7 4 7 0 2 4 7 4 3 0
2 2 1
May 2 0 8 3 3 0 0 0 5 4 5 0 0 5 6 8 3 0
2 1 1
Jun 13 0 5 5 5 0 3 0 3 1 8 5 0 0 6 8 8 3 0
1 1 2 1
Jul 25 0 5 5 3 3 0 0 0 3 8 5 0 0 0 5 8 8 0
1 1 3
Sep 19 0 2 2 0 2 0 5 2 7 0 7 2 0 2 2 7 7 0
2 1 1 1
Oct 31 0 7 2 2 0 0 0 5 3 5 0 0 2 9 2 4 9 0
1 1 1 1 1
Dec 12 0 7 5 2 0 0 0 7 2 0 2 0 2 2 7 5 5 2 0
Jan 30 2 1 1
‘18 0 3 3 8 0 0 0 8 8 0 0 0 3 4 5 3 8 8 0
4 1
Mar 20 0 3 3 8 0 0 0 8 0 3 3 0 0 7 3 0 8 6 0
2 2 1 1
May 1 0 0 3 8 0 0 3 2 5 8 0 0 0 3 5 3 1 1 0

Other responses:
• Debt and unfunded liabilities • Market volatility
• Democrats getting control of • Supply constraints in residential
Congress construction

CNBC Fed Survey – May 1, 2018
Page 26 of 34
FED SURVEY
May 1, 2018

24. 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%

This survey:
35%
34.0% 16.5%

30%
28.5% 28.8%

26.0%
25.9%
25.3%
25.5%
25% 24.4%
23.5%
22.9%24.1% 23.2%

22.1%
22.2%
20.6% 21.6%
20.4% 21.1% 19.3%
20% 20.3% 18.9%
18.8%
18.2% 18.4% 18.5%
19.1% 17.3% 18.6% 18.1%
16.9% 16.9%
17.6% 16.2% 16.4% 17.4% 16.5%
16.7%
15.1% 16.4%
16.2%
15% 15.1% 14.3%
15.3% 15.0% 14.9%
15.2% 15.2%
14.6% 14.7%
13.6% 13.7%
13.0%

10%

CNBC Fed Survey – May 1, 2018
Page 27 of 34
FED SURVEY
May 1, 2018

25. What is your primary area of interest?

Other
Currencies 17%
0%

Fixed Income Economics
17% 50%

Equities
17%

Comments:

Marshall Acuff, Managing Director, Silvercrest Asset
Management: Concerned about the generally tepid stock price
reaction to favorable first quarter earnings reports.

Jim Bianco, President, Bianco Research: The Fed is hiking too
much. The 10-year/3-month curve is what matters. It was 400 bps 5
years ago, now it is 100 bps. That is still steep but heading lower.
Too early to say it is signaling a recession but headed in that
direction.

Peter Boockvar, Chief Investment Officer, Bleakley Advisory
Group: It is no coincidence that a market correction and jump in
volatility is happening as the Fed gets deeper into its tightening. It
happens just about every time.

CNBC Fed Survey – May 1, 2018
Page 28 of 34
FED SURVEY
May 1, 2018

Kathy Bostjancic, Head of U.S. Macro Investor Services,
Oxford Economics USA: The May 1 -2 policy meeting should be
pro forma, since the Fed is unlikely to change interest rates, there
will be no updates to the economic or "dot plot" interest rate
forecasts, and no post-meeting press conference. However, strong
economic momentum and accelerating price and wage gains should
lead to three more Fed rate hikes this year.

Robert Brusca, Chief Economist, Fact and Opinion Economics:
I think tax cuts and fiscal stimulus will be the big disappointments of
2018-2019. It will leave Fed policy as too aggressive.

John Donaldson, Director of Fixed Income, Haverford Trust
Co.: We still believe that the Fed will be gradual in its rate hikes.
They are very aware that no central bank has ever raised rates from
zero. Therefore, there is little evidence of how the economy responds
to rate increases from these low levels. We expect a continued
pattern of "raise rates, measure what happens, raise again, wait and
measure again." The last thing they want is to find out they went
one or two increases too far.

Bill Dunkelberg, Chief Economist, National Federation of
Independent Business: "Craziness" seems to be producing some
useful results internationally, might resolve very positively for global
economy.

Mike Englund, Chief Economist, Action Economics, LLC: The
economy has room to run despite the low jobless rate, given factory
sector slack and rapid fixed investment growth. Stimulative policy
should translate to faster GDP growth at least through 2019, with
limited inflation consequence.

CNBC Fed Survey – May 1, 2018
Page 29 of 34
FED SURVEY
May 1, 2018

Robert Fry, Chief Economist, Robert Fry Economics LLC: The
Tax Cuts & Jobs Act will be a net benefit to the economy IF AND
ONLY IF it causes businesses to significantly increase investment in
plant, equipment, and intellectual property. If they do, the tax cut is
primarily supply-side and will boost productivity growth and
ultimately lessen inflationary pressures and extend the economic
expansion. If businesses don't significantly boost investment,
perhaps because they pay too much attention to equity analysts, the
tax cut is primarily demand-side stimulus at the wrong end of the
business cycle and will boost inflation and interest rates, eventually
ending the expansion.

Kevin Giddis, Head of Fixed Income Capital Markets, Raymond
James Financial: While there is a small threat of a slowing of
economic growth right now, between the Fed's current rate policy
and a surge in deficits, it is only a matter of time when that growth
will succumb to this weight.

Stuart Hoffman, Senior Economic Advisor, PNC Financial: A
troubling trio of threes: $3/gallon gasoline price, 3% 10-year T note
rate and 3% real GDP and wage (AHE) growth for the next three
quarters will keep stock prices very volatile but with an upward bias.
April is the seasonally biggest month for higher Treasury note rates.
June is the second biggest.

Art Hogan, Chief Market Strategist, B. Riley FBR: 2017 was the
year of pro-growth policy formation with tax reform and
deregulation. 2018 seems to be the year of protectionism with tariffs
and sanctions. The market is telling you which one of those is better.

CNBC Fed Survey – May 1, 2018
Page 30 of 34
FED SURVEY
May 1, 2018

Jack Kleinhenz, Chief Economist, National Retail Federation: I
expect the Fed to maintain rates at its May meeting but they will
recognize rising inflation and wages. First quarter data on the
economy, inflation, and wages appear to be correctly anticipated by
the Fed. Based on recent Fed speeches, it appears that
policymakers are accepting the need to possibly overshoot.

David Kotok, Chairman and Chief Investment Officer,
Cumberland Advisors: Extremely difficult time for forecasting as so
many moving parts and huge Washington chaos.

Subodh Kumar, President, Subodh Kumar & Associates:
Inflection Still Looms - In the equities, fixed income, currencies and
commodities space of capital markets as well as in politics, whether
raw or on trade. Losses in fixed-income holdings have been building
but sales may be occurring where possible rather than where
needed. We underweight fixed income. Speak softly but carry a big
stick seems subtext in French President Macron's speech to
Congress. Currency volatility could be latent and we espouse
precious metals for diversification. The efficacy of earnings beating
consensus has deteriorated away from being informative. Currently,
earnings management appears only exceeded by the penchant of
dictators for over 99% approval ratings. At present valuations,
limited appear to be the margins for error for not being able to
continually deliver double-digit growth. More equity selectivity
appears in order over momentum and ETF stances. As financing
conditions evolve, leadership from the financials sector will be
critical.

CNBC Fed Survey – May 1, 2018
Page 31 of 34
FED SURVEY
May 1, 2018

Guy LeBas, Chief Fixed Income Strategist, Janney
Montgomery Scott: Current economic data are unambiguously
good. Job growth is solid, wage gains are accelerating slightly, and
the corporate sector is reasonably healthy. Twelve months down the
road, the markets (bonds in particular) will be talking about a
probable recession as the fiscal impulse from tax cuts and spending
deals fade into 2019. That means a flatter--and possibly inverted--
yield curve.

Drew Matus, Chief Investment Strategist, MetLife Investment
Management: Market volatility has not yet translated into changes
in real economic behavior. It continues to seem likely that the
current expansion will continue to a new record length.

Rob Morgan, Chief Investment Officer, Sethi: The spread
between the 2-year and 10-year Treasury is now the tightest it's
been since 2007. The flattening yield curve in 2007 was a harbinger
of the Great Recession of 2008. Scary stuff.

Joel Naroff, President, Naroff Economic Advisors: The poorly
timed and excessively large tax cut will create the bubbles that lead
to the next recession, unless businesses simply don't invest
significantly - which means the business tax cuts were unnecessary.

Lynn Reaser, Chief Economist, Point Loma Nazarene
University: With inflation firming and the economy likely to regain
speed, the Fed has no reason to fight the market. Look for a steady
diet of a rate hike each quarter.

CNBC Fed Survey – May 1, 2018
Page 32 of 34
FED SURVEY
May 1, 2018

John Roberts, Director of Research, Hilliard Lyons: Interesting
that the markets had a great year in the face of weak earnings
growth, while so far this year we are down with very strong earnings
growth. Did last year anticipate this year's strong earnings growth
and steal some of the gains from this year? If we continue to see
such strong earnings growth, anticipate the market to regain its
upward momentum despite not exactly cheap stocks and rising
interest rates.

Chris Rupkey, Chief Financial Economist, MUFG: There are
moderate risks to the economic outlook from protectionism. There is
a gigantic risk that economic growth will underperform relative to the
market's overly optimistic forecast. Massive tax cuts probably won't
be spent in ways that push growth to 3% on a sustainable basis. The
Trump administration forecast for 3% growth is a pipe dream and
one that does not take into account the fact that there are not
enough workers left in the country for companies to employ. Plenty
of cash and capital but not enough workers could sink the economy's
ship the next 12 to 18 months.

Richard I. Sichel, Senior Investment Strategist, The
Philadelphia Trust Company: The long-term positive effects of tax
reform and less extreme regulation is not being given the merit it
deserves.

Allen Sinai, Chief Global Economist and Strategist, Decision
Economics: U.S. and world economies taking off to new "New
Normal" much higher growth paths.

Hank Smith, Co-Chief Investment Officer, Haverford Trust
Company: Hopefully Larry Kudlow has the president's ear.

CNBC Fed Survey – May 1, 2018
Page 33 of 34
FED SURVEY
May 1, 2018

Diane Swonk, Chief Economist, Grant Thornton: The Fed is
attempting to water down the punch and even take a few glasses
away, while the administration and Congress are sneaking flasks of
grain alcohol into the school dance to spike the punch. Tensions
between the Fed and the rest of Washington will intensify, to what
may be an alarming level as we get closer to mid-terms.

Mark Vitner, Managing Director & Senior Economist, Wells
Fargo Securities: Worries about the shape of the yield curve
appear to be a bit premature. While an inverted curve would most
likely signal trouble ahead, a flatter curve is not inconsistent with
continued solid economic growth. With interest rates as low as they
currently are, we only have a limited number of basis points to work
with. What we are dealing with is some spread compression, as rates
both move back to their long-term norms from some exceptionally
low levels.

Mark Zandi, Chief Economist, Moody's Analytics: Massive
deficit-financed tax cuts and government spending increases will
temporarily juice up growth this year and next, but increases the
odds the economy will overheat and suffer a recession early in the
next decade.

CNBC Fed Survey – May 1, 2018
Page 34 of 34