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FED SURVEY

July 31, 2018
These survey results represent the opinions of 42 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 July 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 July-August meeting, the Federal Reserve will:

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

Raise interest
rates 10%

Lower interest
rates 0%

Keep rates
unchanged 91%

Don't know/
unsure 0%

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FED SURVEY
July 31, 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% 100%
98% 98% 97%
95% 95%
94% Raise interest rates: 100%
92%
90%
88%

80%

60%

40%

20% Lower interest rates: 0%

Launch new quantitative easing: 0%
10%10%

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

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(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%

Aug 0%

Sep 90%

Oct 0%

Nov 0%
Average:
Dec 10%
September
2018
Jan '19 0%

Feb 0%

Mar 0%

Apr 0%

May 0%

After
May '19 0%

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July 31, 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

3.74
3.50

3.45 3.46 3.49

3.21
3.00

2.86 2.84
Average

2.50 2.63 2.63
2.48 2.49 2.52
2.39
2.26
2.00

1.50

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

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July 31, 2018

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

Strongly Approve Neutral Disapprove Strongly
approve disapprove
70%

Approve + Strongly Approve 59% Disapprove + Strongly Disapprove 29%

60%

50% 49%
Approve 44%

45%
44%
40%
41%

Disapprove
17%
30%

24% Strongly
Approve
15%
20% 20%
18% 19% 17%
14%
16% 15%
13% 12%
10% 8%
11%

5% Strongly
Disapprove Neutral 12%
12%
0%
Mar 20 May 1 Jun 12 Jul 31

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July 31, 2018

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

Positive Negative Neutral Too soon
for U.S. for U.S. for U.S. to tell
economic economic economic the impact
growth growth growth on U.S.
economic
growth
70%

63%
60%
60% 58%

55%
54%
50%
Negative for growth 54%

40%

31%
30%
27%

23% 24%

20% 21% Too soon to tell 24%

16% Neutral for growth 12%
13%
12%
10% 8% 8% 10%
8%
3% 5%
3%
Positive for growth 10%
0%
Jan 30 Mar 20 May 1 Jun 12 Jul 31

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July 31, 2018

6. How will recent tariffs announced by the Trump
administration, along with threatened and actual
retaliation by those affected countries, affect U.S.
economic growth?

Jun 12 Jul 31
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

3%
Increase
5%

62%
Decrease
59%

Little or 35%
no effect
32%

Don't 0%
know/
unsure 5%

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July 31, 2018

How will recent tariffs announced by the Trump
administration, along with threatened and actual retaliation
by those affected countries, affect U.S. jobs growth?

Jun 12 Jul 31
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

5%
Increase
7%

49%
Decrease
54%

Little or
46%
no effect
34%

Don't 0%
know/
unsure 5%

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July 31, 2018

7. How has your forecast for 2018 U.S. GDP growth been
affected by recently enacted U.S. tariffs and retaliatory
tariffs by other nations?

Average response:

-0.09 percentage points

8. What would be the INCREMENTAL change -- beyond any
change due to already enacted tariffs -- in your 2018 U.S.
GDP growth forecast, if additional tariffs THREATENED by
the U.S. and its trading partners were to be enacted?

Average response:

-0.19 percentage points

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9. In a U.S. trade war with the following trading partners,
which entity would be best equipped to economically
withstand the effects of the conflict?

U.S. Trading Partner Don't know/unsure
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

U.S.-
90% 10%
Canada

U.S.-
73% 15% 13%
China

3%

U.S.-
European 78% 20%
Union

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10. How will President Trump's criticism of the Federal
Reserve affect monetary policy?

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

Make rate hikes
more likely 8%

Make rate hikes
less likely 15%

Have no effect
on rate hikes 78%

Don't know/
unsure 0%

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July 31, 2018

11. How do you feel about President Trump's recent
comments about the Federal Reserve?

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

It's inappropriate
for a president
to comment on 83%
Fed policy

It's acceptable
for a president
to comment on 15%
Fed policy

Don't know/
unsure 2%

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12. Is President Trump's criticism correct? That is,
should the Federal Reserve NOT be raising rates right
now?

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

Yes 6%

No 88%

Don't
know/ 6%
unsure

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July 31, 2018

13. In the past year, the U.S. GDP growth rate has
increased. This shift is:

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

Permanent 27%

Temporary 63%

Don't know/
unsure 10%

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July 31, 2018

14. What one of two factors are most responsible for the
upward U.S. GDP growth rate shift?
 Deregulation and tax cuts (both happened and are not happening again)
 Fiscal cap ex
 Few things in the economy are truly permanent but the ramp up in
economic growth over the past year should have some legs. Part of the
second quarter strength in real GDP growth was due to efforts to produce
and ship product ahead of retaliatory tariffs. Tax cuts and the rollback in
burdensome regulations has also led to increased business investment,
which should begin showing up in stronger productivity growth and
stronger potential GDP growth.
 Tax Bill, Tax Bill
 The stimulus from the budget deficit has added to the positive impact on
GDP from the tax cuts.
 Dissipation of negative effects from energy shock (boosting business
equipment spending) and revival of corporate sentiment.
 Tax cuts and deregulation.
 Deregulation, tax cuts, optimism, spirit
 Tax cuts, mostly at the corporate level, along with an easing of the
regulatory burden.
 Ongoing for some years Not permanent. Pro-business policies. Terrific tax
reductions. Less onerous regulations.
 Tax cuts
 Deregulation and strong job growth
 Easy monetary policy and tax cuts
 Lower tax rates
 Tax cuts, and the fact that world economies are improving in tandem--a
very rare occurrence
 Fiscal stimulus
 Capital investment
 Tax reform and less regulation
 Fiscal stimulus and easy monetary policy
 Tax cuts. Increased defense spending.
 Tax cuts
 Work force growth

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 Favorable tax policy, deregulation
 The corporate tax cut has boosted capital spending. The recovery in oil
prices has also boosted capital spending.
 Tax cuts and government spending increases.
 Budget increase and tax plan
 Higher business investment due to tax reform. The lagged effect of the
decline in oil prices in the second half of 2014.
 Tax cuts and government spending combine for a one-time boost.
 I am just bloody confused by this president!
 Tax code change added 0.5% to our GDP forecast for 2018. "Permanent"
means no recessions...increased growth can never be permanent as
recessions will always occur from time to time.
 Tax reform and regulatory relief
 Tax cuts. How much of the shift is temporary will depend on productivity
response.
 Business tax cuts
 Tax cuts
 Large amount of fiscal stimulus - both tax cuts and spending increases
 Deregulation and tax cuts.
 Tax cuts giving cash to companies and consumers
 Corporate tax reform leads to more business investment and raises
productivity
 Tax cuts
 Deficit-financed tax cuts. Deficit-financed federal government spending
increases.
 Post-oil bounce carryover. Monetary stimulus in 2017 tax cuts.

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July 31, 2018

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

December 31, 2018 December 31, 2019

3,200

3005
2975
3,000
2946
2928
2892
2879
2937
2862

2,800 2839 2848

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 Jun Jul
13 31 14 2 13 25 19 31 12 30 20 1 12 31
2017 2018
Survey Dates

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July 31, 2018

16. 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% 3.51% 3.53%
3.44% 3.43% 3.44%
3.5%
3.37%

3.24% 3.24%
3.22% 3.23%
3.17% 3.17%
3.05%
3.06% 3.07%
3.03%
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 Jun Jul
13 31 14 2 13 25 19 31 12 30 20 1 12 31
2017 2018
Survey Dates

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July 31, 2018

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

3.1%
2.98%
2.87% 2.93%
2.86%
2.90%
2.9%
2.95%
2.85% 2.92%
2.73%
2.70% 2.70% 2.87%
2.67% 2.68%
2.7% 2.80%
2.60% 2.67%

2.56%
2.49%
2.5% 2.54%

2.34%
2.42% 2.32%
2.29%
2.3% 2.25% 2.24%

2.22% 2.19%
2.17%
2.15% 2.14% 2.23%

2.1% 2.10% 2.03%

2.07% 2.06%
2.06%
2.02%
1.87%
1.9%
1.81%

1.78%
1.7%
1.69%

1.5%
Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep Oct Dec Jan Mar May Jun Jul
26 14 26 24 20 1 13 31 14 2 13 25 19 31 12 30 20 1 12 31
2017 2018

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July 31, 2018

18. 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% 3.29%

3.20% 3.24%
3.17%
3.11% 3.18% 3.21%
3.06%
3.16%
2.98% 2.95%
3.0% 3.04% 2.94%
2.92%
2.85% 2.94%
2.91%
2.85% 2.73%
2.79% 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%
Jun 14
Sep 16

Sept 16

Sep 20

Sep 19
Oct 28

Mar 17

Jun 16

Oct 27

Mar 15
Apr 26

Mar 14

Jun 13

Oct 31

Mar 20

Jun 12
Jan 26 '16

Jan 31 '17

Jan 30 '18
Jul 28

Jul 26

Jul 25
Aug 20

Dec 16
Jan 27, '15

Apr 28

Aug 25

Dec 15

Aug 24

Dec 13

Dec 12

Jul 31
Nov 1

May 2

May 1

Survey Dates

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July 31, 2018

19. Will the Fed raise rates above its neutral rate to slow
the U.S. economy?

Jun 12 Jul 31
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

62%
Yes
53%

32%
No
43%

Don't 5%
know/
unsure
5%

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July 31, 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
Jun 12 Q4
Jul 31 Q4

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July 31, 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% 2.94%
2.93%

2.85%
2.85% 2.82%
2.80%
2.8% +2.76%
+2.75%
2.76%

2.72%
2.61% 2.70%
+2.62% 2.66% 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 Jun 12 Jul 31
'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% 2.93% 2.94%
2019 2.85% 2.70% 2.72% 2.66% 2.80% 2.66%

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July 31, 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%
2.46%
2.44% 2.45%
2.41%
2.4% 2.45%
2.38% 2.42%
2.40%

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 May Jun Jul
13 31 14 2 13 25 19 31 12 30 20 1 12 31
2017 2018
Survey Dates

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July 31, 2018

23. What do you expect the U.S. unemployment rate will
be for:

Jun 12 Jul 31
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

3.74%
2018

3.84%

3.64%
2019

3.79%

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July 31, 2018

24. 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

Worker shortage
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

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July 31, 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

Worker shortage
Slow job growth

Debt ceiling
Deflation
Inflation

Deficits

Other
Survey Date
Jan 27 1 1 4 1
'15 0 3 9 0 0 0 6 6 1 6 6 0
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

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FED SURVEY
July 31, 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

Worker shortage
Slow job growth

Debt ceiling
Deflation
Inflation

Deficits

Other
Survey Date
2 3
Nov 1 3 7 8 0 3 0 8 3 2 3 0 0 5 8 0
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
1 3 1
Jun 12 3 0 3 1 0 0 0 3 5 5 3 0 0 5 3 0 8 8 4 0
Jul 31 5 1
0 0 3 8 0 0 3 5 5 3 3 0 0 3 3 0 0 0 8 0

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July 31, 2018

Other responses:
 Confidence shock constraints. If you mean "what
 Debt and unfunded liabilities threatens to end the recession?" the
 If, by threat, you mean "what's answer is always either an oil price
holding it back the most?" it's the shock or a Fed policy mistake.
slow recovery in residential
construction, due to supply

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July 31, 2018

25. 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% 16.8%

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%
17.3% 18.6%
19.1% 18.1%
16.9% 16.9% 16.8%
17.6% 16.2% 16.4% 17.4% 16.5%
16.7%
15.1% 16.4%
16.2%
15% 15.1%
15.3% 15.0% 14.9%
15.2% 15.2%
14.6% 14.7%
13.6% 13.8%
13.7%
13.0%

14.3%

10%

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July 31, 2018

26. What is your primary area of interest?

Currencies Other
0% 15%

Fixed Income
17% Economics
51%

Equities
17%

Comments:

Marshall Acuff, Managing Director, Silvercrest Asset
Management: Goldilocks is alive and well.

Peter Boockvar, Chief Investment Officer, Bleakley Advisory
Group: Rising interest rates and QT remain the biggest risk to the
entire economic and market apple cart. A soft landing is a rare
occurrence and considering the extent of the easing prior, the Fed's
job challenge of achieving one is even more remote.

Kathy Bostjancic, Head of U.S. Macro Investor Services,
Oxford Economics USA: The good news for the FOMC is that they
have essentially reached their dual mandate for full employment and
near 2% inflation. The challenge is maintaining that nirvana, which
means not tightening too much or too little.

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July 31, 2018

John Donaldson, Director of Fixed Income, Haverford Trust
Co.: Fed Chairman Powell was very straightforward in his testimony
to Congress. His "we stay in our lane" serves as a roadmap for how
the FOMC will proceed going forward.

Neil Dutta, Head of Economic Research, Renaissance Macro
Research: At the moment, we think the macro story is largely
running in place. Fiscal stimulus is largely offsetting the negative
fallout from trade tensions and tariffs. Also, in terms of risk, the one
from tangible actions on trade is much higher than the largely
imaginary risks to the Fed's independence from Trump's comments.

Robert Fry, Chief Economist, Robert Fry Economics LLC: The
Fed should focus more on shrinking the balance sheet rather than on
simply raising the federal funds rate. A more market-determined
bond yield would provide useful guidance in setting the funds rate.
But the Fed is reluctant to shrink its balance sheet more rapidly (and
let bond yields rise) because it exaggerates the importance of long-
term bond yields and understates the importance of short-term
interest rates. The MARGINAL home buyer gets an ARM, not a 30-
year fixed mortgage. The MARGINAL business borrower doesn't
issue 30-year bonds; it borrows from the bank at Prime-Plus. People
and businesses who borrow long-term don't need the money, and
their investment decisions aren't affected by changes in long-term
interest rates. People who need the money borrow at rates that are
tied to fed funds, LIBOR, or some other short-term interest rate.
(The greater importance of short-term interest rates is why the yield
curve is a useful leading indicator.)

Kevin Giddis, Head of Fixed Income Capital Markets, Raymond
James Financial: While the U.S. economy still has solid growth
potential in front of it, you still get the sense that it wouldn't take
much to watch it derail, with a high degree of confidence that
Washington will be the cause of the derailment with its trade policies
or some poor decision-making at the top.

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July 31, 2018

Stuart Hoffman, Senior Economic Advisor, PNC Financial:
President Trump's criticism of the Fed policy of rate hikes puts the
Fed in an awkward situation. They are more likely to err on the side
of more rate hikes rather than fewer to avoid the appearance of
political pressure. The effect of Trump's recent and likely more
criticism ahead will be counterproductive.

Art Hogan, Chief Market Strategist, B. Riley FBR: The Fed will
continue to use a strong economy to normalize rates agnostic to
comments from the White House. The shape of the yield curve could
slow down that process. A tweet will not.

John Kattar, Chief Investment Officer, Ardent Asset
Management: Despite a solid economic backdrop and signs of
incipient inflation, I think the Fed is running out of room to raise
rates and shrink the balance sheet. Fiscal deficits will be too large,
and it's unclear how that torrent of new debt will be comfortably
absorbed by the market with the Fed adding to the supply.

David Kotok, Chairman and Chief Investment Officer,
Cumberland Advisors: We have focused on monetary for decades.
Trade narrative is a different game. The shocks are cliffs, not
gradualism.

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July 31, 2018

Subodh Kumar, President, Subodh Kumar & Associates: Much
Ado About A Lot. Unlike the experience of recent years, friction
between fiscal policy and monetary strictures have been more of a
norm. It makes risk premium vigilance necessary. Markets appear
momentum driven still but aspects appear to be evolving. We
expect a rising interface of policy and market volatility in an interplay
in political economy. Monetary policies appear clearer in the United
States and smaller advanced countries. Both should be favored over
those in Europe and Japan, but by positioning in shorter maturities.
On growth versus value as well as of defensive versus interest rate
sensitive performance, equity parameters seem mixed. Generally,
we would focus on quality and stronger financial structure. Balance
to U.S. and emerging market exposure can be achieved via
commodity-rich areas like Australia and Canada, among others.

Guy LeBas, Chief Fixed Income Strategist, Janney
Montgomery Scott: The chorus of "this time is different" has arisen
with regard to the yield curve flattening, but the bar for rejecting 40
years of yield curve history is much higher than the thesis these
yield curve apologists have put forth provides.

Drew T. Matus, Chief Market Strategist, MetLife Investment
Management: Growth in 2018 has been solid and the expansion
continues. The open question remains how long can 10-year yields
stay below 3% with accelerating growth and rising inflation?

Rob Morgan, Chief Investment Officer, Sethi: Possible trade
wars with Canada, China, and/or the EU won't deter the Fed from
raising rates two more times this year.

Joel Naroff, President, Naroff Economic Advisors: Business
investment, while strong, is still disappointing given the magnitude
of the tax cuts and with wage gains not accelerating, once the sugar
high wears off, growth could be in trouble.

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July 31, 2018

Lynn Reaser, Chief Economist, Point Loma Nazarene
University: Trade negotiations could turn out really well or really
badly. Prospects relative to Europe and Mexico now look more
favorable, while China remains much in question. The ultimate
outcome will dictate the course for the economy, the Fed, and the
markets. While too soon to be overly optimistic, undue pessimism is
also not yet warranted.

John Ryding, Chief Economist, RDQ Economics: Nominal GDP
growth, at 5.4% on a year-over-year basis, is now the strongest
since 2006 Q3. This is the most important summary variable for
monetary policy from the GDP report and shows a wide gap between
this rate and the fed funds target rate. I would expect the Fed's
estimate of r-star to rise and the Fed to continue hiking rates and
revising up its SEP path.

Richard I Sichel, Senior Investment Strategist, The
Philadelphia Trust Company: The Fed chairman provides welcome
clarity along with an independent and well-constructed plan. That,
coupled with a greatly rejuvenated economy and workforce, should
propel corporate earnings and stock performance.

Allen Sinai, Chief Global Economist and Strategist, Decision
Economics: Best yet to come in the U.S. and global economies
despite trade conflicts and rising interest rates.

Hank Smith, Co-Chief Investment Officer, Haverford Trust
Company: Trump was smart to lead with tax and regulatory reform
before tariff fights.

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July 31, 2018

Diane Swonk, Chief Economist, Grant Thornton: We are in a
marathon. That means we need to pace ourselves to make it to the
finish line with as many people in the run as possible. The risk is that
we are sprinting too soon with fiscal stimulus, which could cause us
to crash before we cross the finish line. The hurdles being erected
with tariffs and threat of a trade war make the run even harder to
complete.

Peter Tanous, Chairman, Lynx Investment Advisory: The dollar
amount of interest payments on our national debt will become
eyepopping and ring alarm bells throughout the economy and the
stock market.

Mark Vitner, Managing Director & Senior Economist, Wells
Fargo Securities: Trade restrictions are the greatest threat to the
expansion right now because they increase uncertainty and cause
businesses and consumers to become more cautious. The increase
in risk aversion raises the chances of a policy mistake, as the Fed
might move too aggressively. President Trump's comments on the
Fed were barely within the line. He did stress his support for
Chairman Powell and his views on monetary policy were already
likely expressed to the Fed via Treasury Secretary Mnuchin. Trump's
public comments are his way of saying "we fixed the economy. If it
breaks blame the Fed."

Scott Wren, Senior Global Equity Strategist, Wells Fargo
Investment Institute: You certainly can't extrapolate 2Q 2018
GDP growth very far into the future. GDP growth in 2019 is likely to
be slightly lower than 2018. Modest to good GDP growth combined
with modest inflation should allow stocks to remain buoyant but the
S&P 500 is at or near "fair value" for this point in time. We look for
6%-7% total return over the next 12 months. The earnings growth
rate in 2019 is likely to be far below 2018's pace but the market
knows that and has largely priced that in.

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July 31, 2018

Mark Zandi, Chief Economist, Moody's Analytics: Deficit-
financed tax cuts and increases in government spending will juice
growth through late next year. The economic dark-side of this
poorly-timed fiscal stimulus will follow quickly.

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