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FED SURVEY

March 20, 2019


These survey results represent the opinions of 43 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 March 14-17, 2019. 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 March meeting, the Federal Reserve will:

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

Raise interest
rates 0%

Lower interest
rates 0%

Keep rates
100%
unchanged

Don't know/
unsure 0%

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

2. How many times in total will the Federal Reserve hike or


cut rates (assuming 25-basis point moves) in …?

2019 hikes 2020 hikes 2019 cuts 2020 cuts


3.00

2.63
2.50
2.52 2.52 2.45
2.48 2.49
2.39

2.26

2.00

1.81
Average

1.50

2019 Hikes

1.20

1.00
0.74
0.76
2020 Hikes 0.69

0.71
0.50 2020 Cuts 0.66
0.63

2019 Cuts
0.24
0.14
0.00
Dec Jan Mar May Jun Jul Sep Nov Dec Jan Mar
12 30 '19 20 1 12 31 25 7 18 29 20
Survey Dates

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

3. Currently, the Fed's balance sheet is around $4 trillion.


At what level do you expect the Fed to stop reducing its
balance sheet and when do you expect the Fed to reach
this level?

Jan 29 Mar 20
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Less than $850B


Averages
$850B
$875B
Jan 29:
$900B $2.85
$925B trillion
$950B
$975B Mar 20:
$1.00T $3.44
$1.25T trillion
$1.50T 4%

$1.75T 2% Averages
$2.00T 5%
13% for when
$2.25T the Fed
$2.50T 13%
will stop
2%

$2.75T 2%
7%
Jan 29:
$3.00T 20%
5%
2021 Q1
$3.25T 2%
24%

$3.50T 13%
54%
Mar 20:
$3.75T 4%
28% 2020 Q1
$4.00T 2%

Don't know/unsure

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

4. The Fed has indicated that it will stop its balance sheet
reduction later this year. I ...
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Agree 55%

Disagree:
Reductions
should
continue 41%
beyond
2019

Disagree:
Reductions
should 0%
end
earlier

Disagree:
For some
other 2%
reason

Don't
know/ 2%
unsure

Other reason for disagreement: Too high a level. Just keeping the equity markets
afloat.

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

5. What is your opinion of the Fed’s recent change from a


policy of gradual increases to one of patience on
increasing rates?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

It's the
right move 81%

The Fed
should
continue 14%
hiking

The Fed
should've
gone
further 5%
and cut
rates

Don't
know/ 0%
unsure

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

6. Do you generally approve or disapprove of the job


President Trump is doing handling the economy?

Approve Disapprove

100%

90%

80%

70%
66%
63% 61%
58% 59%
60% 57%
52% 51%
50%
50% 54%

43%
40% 36% 43%
31% 32% 32%
29% 30%
30%
29% 24%
26%
20%
23% 22% 21%

10%

0%
Jun Jul Sep Mar May Jun Jul Sep Nov Dec Jan Mar
13 25 19 20 1 12 31 25 7 18 29 20
'17 '18 '19

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

7. Regarding trade negotiations between China and the


U.S., which of the following is most likely this year?

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

New U.S.
tariffs imposed 2%
on China

A trade agreement
between China 79%
and the U.S.

An agreement
to continue
talks without 17%
a new agreement

Don't know/unsure 2%

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

8. How have your 2019 and 2020 forecasts for GDP and
inflation been affected by recently enacted U.S. tariffs
and retaliatory tariffs by other nations? (Expressed as
incremental change of forecast in percentage points)

Average responses:
Survey Sep 25 Nov 7 Dec 12 Jan 29 Mar 20
date

2019 -0.11 -0.11 -0.20 -0.16 -0.16


GDP: pct points pct points pct points pct points pct points

2020 -0.10 -0.01


GDP: pct points pct points

2019 +0.11 +0.15 +0.07 +0.07 +0.02


Headline pct points pct points pct points pct points pct points
inflation
(CPI):

2020 +0.05 +0.01


Headline pct points pct points
inflation
(CPI):

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

9. What is your estimate of the long-run potential growth


rate of the U.S. economy?

Average response: 2.34%

10. Has your estimate of potential growth changed as a


result of the late 2017-tax cut?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Yes 38%

No 60%
Don't
know/ 2%
unsure

11. (For those answering yes to previous question)


By how much?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
-1.0%
-0.9%
-0.8%
-0.7%
-0.6%
-0.5% 6%
-0.4%

Average:
-0.3%
-0.2%
-0.1%
0.0%
0.1% 13%
+0.37%
0.2% 13%
0.3% 25%
0.4% 6%
0.5% 13%
0.6%
0.7% 13%
0.8% 6%
0.9%
1.0% 6%

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

12. Recent strong wage growth will most likely result


in...

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

Higher consumer
price inflation 10%

Lower corporate
profits 27%

Both higher
inflation and 27%
lower profits

Neither higher
inflation nor 34%
lower profits

Don't know/
unsure 2%

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

13. By how much will the current global slowdown


increase or decrease U.S. GDP growth this year?

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

-1.0%

-0.9%

-0.8%

-0.7%
Average:
-0.6%

29%
-0.5%
-0.32%
-0.4% 7%

-0.3% 31%

-0.2% 26%

-0.1% 7%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.9%

1.0%

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

14. What role are trade tensions and tariffs playing in


the global economic slowdown?

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

Significant
role 45%

Modest
role 48%

No role
at all 7%

Don't
know/ 0%
unsure

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

15. Another government shutdown this year is

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

Likely 7%

Unlikely 79%

Don't
know/ 14%
unsure

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

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

December 31, 2019 December 31, 2020

3,200

3038
3005
2975
3,000 2946
2928 2936 2925
2879
2836 2846

2,800
2862 2861

2774
2750

2,600

2,400

2,200

2,000

1,800

Dec Jan March May Jun Jul Sep Nov Dec Jan Mar
12 30 20 1 12 31 25 7 18 29 20
2018 2019
Survey Dates

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

17. What do you expect the yield on the 10-year


Treasury note will be on … ?

December 31, 2019 December 31, 2020

4.0%

3.54% 3.54% 3.51% 3.53% 3.56%


3.44% 3.45%
3.5%
3.29%
3.24%
3.17%
3.06%
3.16%
3.0%
3.03%
2.92%

2.5%

2.0%

1.5%

1.0%
Dec Jan March May Jun Jul Sep Nov Dec Jan Mar
12 30 20 1 12 31 25 7 18 29 20
2018 Survey Dates 2019

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

18. Where do you expect the fed funds target rate will
be on … ?
3.1%
Dec 31, 2019 Dec 31, 2020 Dec 31, 2021
3.04%
3.01%
2.98%
3.0% 2.99%

2.87% 2.98%
2.90%
2.93%
2.9% 2.86% 2.95%
2.92%
2.87%
2.85%
2.8%
2.73% 2.80% 2.74%
2.70% 2.70%
2.68% 2.69% 2.66%
2.7% 2.67%

2.67% 2.67%

2.65%
2.60%
2.6%
2.56%
2.56%
2.54%
2.5%
2.49%
2.49%
2.51%

2.4% 2.44%
2.42%

2.3%

2.2% 2.22%

2.1%
Jan Jan Mar Jan
Nov Dec Mar May Jun Jul Sep Oct Dec May Jun Jul Sep Nov Dec Mar
31 30 ch 29
1 13 14 2 13 25 19 31 12 1 12 31 25 7 18 20
'17 '18 20 '19
Dec 31, 2019 2.22 2.67 2.70 2.73 2.68 2.56 2.42 2.49 2.60 2.54 2.80 2.86 2.87 2.98 2.93 3.01 3.04 2.69 2.66 2.56
Dec 31, 2020 2.70 2.67 2.90 2.85 2.87 2.95 2.92 2.98 2.99 2.74 2.65 2.51
Dec 31, 2021 2.67 2.49 2.44

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

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%

3.34%
3.30% 3.29%

3.20% 3.24%
3.17%
3.27%
3.11% 3.18% 3.21%
3.06% 3.11%
3.16%
2.98%
3.0% 3.04% 2.95% 2.94%
2.98%
2.92%
2.94%
2.91% 2.86%
2.85% 2.73% 2.85%
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%
Aug 20

Aug 25

Aug 24
Mar 17

Mar 15

Mar 14

March 20

Mar 20
May 2

May 1
Nov 1

Nov 7

Jan 29
Jan 27, '15

Sept 16

Jan 31 '17
Apr 28

Apr 26
Oct 28

Oct 27

Jan 26 '16

Oct 31

Jan 30 '18
Jun 16

Jun 14

Jun 13

Jun 12
Sep 16

Sep 20

Sep 19

Sep 25
Jul 28

Jul 26

Jul 25

Jul 31
Dec 16

Dec 15

Dec 13

Dec 12

Dec 18

Survey Dates

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

20. When do you believe fed funds will reach its


terminal rate?
2017 2018 2019 2020
Survey date
Q1 Q2 Q3 Q4 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
Ja n 27, 2015 Q1
Ma r 17 Q4
Apr 28 Q1
June 16 Q1
Jul y 28 Q2
Aug 25 Q3
Sept 16 Q1
Oct 27 Q3
Dec 15 Q1
Ja n 26, 2016 Q2
Ma r 15 Q3
Apr 26 Q4
Jun 14 Q4
Jul 26 Q4
Aug 24 Q4
Sept 20 Q4
Nov 1 Q1
Dec 13 Q2
Ja n 31, 2017 Q2
Ma r 14 Q2
Ma y 2 Q2
June 13 Q2
Jul 25 Q2
Sep 19 Q2
Oct 31 Q3
Dec 12 Q3
Ja n 30, 2018 Q3
Ma r 20 Q3
Ma y 1 Q3
Jun 12 Q4
Jul 31 Q4
Sep 25 Q4
Nov 7 Q4
Dec 18 Q1
Ja n 29, 2019 Q1
Ma r 20* Q2
*15% say it has already reached its terminal rate

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

21. What is your forecast for the Q4/Q4 percentage


change in real U.S. GDP for … ?
2019 2020
3.0%

2.9%

2.8%

2.7%

2.6%

2.5% 2.44%

2.4%

2.3%
2.33% 2.31%
2.2%

2.1% 2.05%

2.0%

1.98%
1.9%

1.8%
1.81%
1.7%

1.6%

1.5%
Dec 18 Jan 29 '19 Mar 20
Survey Dates

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

22. What is your forecast for the year-over-year


percentage change in real U.S. GDP for …?
2019 2020

3.0%

2.85%
2.80%
2.78%
2.8% 2.75%

2.72%
2.70%
2.66% 2.66%
2.6%
2.56% 2.52%

2.4%

2.2% 2.25%

2.06% 2.07%

2.0%

1.96%

1.8%
Dec Jan March May Jun Jul Sep Nov Dec Jan Mar
12 30 20 1 12 31 25 7 18 29 20
'18 '19

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

23. What is your forecast for the year-over-year


percentage change in the headline U.S. CPI for …?
2019 2020

2.6%
2.54%
2.51%
2.48%
2.5% 2.46%
2.41%
2.4% 2.40%
2.40%
2.38%
2.3%
2.26%

2.23%
2.2% 2.20%

2.1%

2.08%
2.05%
2.0%

1.9% 1.90%

1.8%

1.7%

1.6%
Dec Jan March May Jun Jul Sep Nov Dec Jan Mar
12 30 20 1 12 31 25 7 18 29 20
2018 2019
Survey Dates

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

24. What do you expect the U.S. unemployment rate will


be for:

2019 2020

4.60%

4.40%

4.20%

4.00% 3.96%
3.93% 3.93%

3.79%
3.80%
3.80%
3.77%

3.60% 3.67% 3.66%


3.64%
3.61%

3.40%

3.20%

3.00%
Jun 12 Jul 31 Sep 25 Nov 7 Dec 18 Jan 29 Mar
'19 20
Survey Dates

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

25. 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

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

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

CNBC Fed Survey – March 20, 2019


Page 24 of 35
FED SURVEY
March 20, 2019

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

CNBC Fed Survey – March 20, 2019


Page 25 of 35
‘19





Nov 7

Jan 29
Dec 18

Mar 20
Sep 25
Survey Date

Page 26 of 35
5
0
0
0
2
European recession/financial crisis

2
0
2
0
2
Tax/regulatory policies

2
2
2
3
2
Slow job growth

Other responses:

Policy mistake
Falling oil prices
0
0
0
7
9
Inflation

0
0
0
0
0
Deflation

0
0
0
0
0
Debt ceiling

0
2
0
0
2
Deficits
FED SURVEY

CNBC Fed Survey – March 20, 2019


March 20, 2019

5
2
0
1
0
1
2
Rise in interest rates

5
7
7
3
7
Geopolitical risks

Debt, including unfunded liabilities


2
3
0
2
7
1
7
4

Global econ weakness

0
0
0
3
0

Slow wage growth

0
0
0
0
2

Terrorist attacks in the U.S.

0
0
0
0
0

Immigration policy

Outcome of US presidential election

7
2
9
2
1
3
4
1
6
2

0 Protectionist trade policies


2
2
3
4

Trump's temperament
2
0
0
0
0

Overvaluation of equities

Continued negativity from anti-Trump media eroding confidence


2
4
0
0
4

Worker shortage
7
6
1
9
1
7
1
2
2

Fed policy mistake


0
1
6
1
7
1
3
9

Other
0
0
2
0
2

Don't know/unsure
FED SURVEY
March 20, 2019

26. In the next 12 months, what percent probability do


you place on the U.S. entering recession? (0=No chance
of recession, 100=Certainty of recession)
40%

36.1%
This survey:
24.4%
35%
34.0%

Highest since
January 2016
30%
28.5% 28.8%

26.0%

25.9% 25.3% 26.1%


25.5%
25% 24.4%
24.1% 23.5%
23.2% 24.4%
22.9% 22.9%
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% 18.6%
17.3% 18.6% 18.1%
19.1%
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% 14.4%
13.7%
13.0%
13.8%
14.3%

10%
Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18
Dec-12

Dec-17
Dec-11

Dec-13

Dec-14

Dec-15

Dec-16

Dec-18
Feb-12

Feb-13

Feb-14

Feb-15

Feb-16

Feb-17

Feb-18

Feb-19
Au g-14
Au g-11

Au g-12

Au g-13

Au g-15

Au g-16

Au g-17

Au g-18
Oct -13

Oct -18
Oct -11

Oct -12

Oct -14

Oct -15

Oct -16

Oct -17
Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18

CNBC Fed Survey – March 20, 2019


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FED SURVEY
March 20, 2019

27. What is your primary area of interest?

Currencies
Other
0%
14%

Fixed Income
17%
Economics
57%
Equities
12%

Comments:

Jim Bianco, President, Bianco Research: The Fed is done. The


last hike was December 19, 2018.

Peter Boockvar, Chief Investment Officer, Bleakley Advisory


Group: John Williams and his colleagues need to study real hard the
experience of the ECB and BOJ when thinking about the efficacy of
NIRP and more QE. Pushing on a string comes to mind.

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FED SURVEY
March 20, 2019

Kathy Bostjancic, Chief US Financial Market Economist,


Oxford Economics: Fed officials are likely concerned about the
declines in the consumer survey-based inflation expectations. This is
a near-term signal to pause, but a long-term concern, especially if it
continues into the next downturn. The University of Michigan 5-year
inflation expectations measure fell back to a record low of 2.3% in
February, falling a large 0.3 ppts from January's 2.6% reading. The
New York Fed's consumer inflation expectations measure declined
0.2 ppts in February to 2.77%, breaking a year's long string of
steady readings.

Robert Brusca, Chief Economist, Fact and Opinion Economics:


Difficult times here and ahead.

Thomas Costerg, Senior US Economist, Pictet Wealth


Management: The Fed is now in a 'debt dominance' monetary
regime, where it realises that it will not be able to normalise policy
due to high debt levels (corporate and federal debt in particular).
This echoes the recent speech by Dallas Fed President R. Kaplan
where it got scared about high corporate debt.

John Donaldson, Director of Fixed Income, Haverford Trust


Co.: I think I answered more “don't knows” than in any other
survey. That is a result of the unpredictability of the administration.
In that context, the Fed's most likely course of action is steady.
Current odds are 33% for a rate cut by next January and 0% chance
of a hike. We think that the real odds are closer to a 90% chance of
no action and 5% on either side for a policy move.

Bill Dunkelberg, Chief Economist, National Federation of


Independent Business: Central banks have taken over financial
markets. The Fed balance sheet won’t shrink much.

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FED SURVEY
March 20, 2019

Neil Dutta, Head of Economic Research, Renaissance Macro


Research: Wage growth has accelerated but consumer price
inflation has not. Meanwhile, corporate profit margins remain
relatively elevated. What gives? We suspect productivity is stronger
than is widely believed.

Mike Englund, Chief Economist, Action Economics, LLC: U.S.


economic growth has not slowed as significantly as the market
turmoil in December, and prevailing market narratives, would
suggest. Available "hard" data show only a modest slowing in U.S.
growth into 2019.

Robert Fry, Chief Economist, Robert Fry Economics LLC: My


forecast for 2019, especially for the second quarter, might be too
low. The companies at the trade association meetings I speak to are
not seeing a slowdown. Last year's decline in stock prices is due
mostly to lower earnings from abroad (about 45% of S&P 500
earnings) and to Powell's words (not the Fed's actions). The
apparent slowdown in the economy (December retail sales, January
industrial production, February employment) may be due to the
stock market decline (largely reversed after Powell changed his
tune), the government shutdown (over), and bad weather (winter is
leaving). The underlying US economy is still healthy.

Kevin Giddis, Head of Fixed Income Capital Markets, Raymond


James Financial: The U.S. economy is doing its level best to carry
the torch for the rest of the world, but until we see inflationary
pressures increase, global growth, or a trade deal with China, I don't
believe that interest rates are going anywhere but lower, especially
while the Fed remains content with watching.

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FED SURVEY
March 20, 2019

Art Hogan, Chief Market Strategist, National Securities: We


expect the U.S. and China will reach a trade deal in the coming
weeks, allowing most or all of the tariffs, on both sides, to be
removed. If the administration decides to pivot immediately to tariffs
on European autos, any positive momentum derived from the end of
the US-China trade war will dissipate rapidly.

John Kattar, Chief Investment Officer, Ardent Asset


Management: We are entering a multi-year period where Fed policy
will be stable and boring. They are nearly done tightening, and I
don't expect another round of QE, as some do. I also believe this is
the most prudent policy and the one that will most likely lead to
good economic outcomes.

Jack Kleinhenz, Chief Economist, National Retail Federation:


Our outlook for consumer spending in 2019 has not changed but
weakness is expected in the first quarter due to lagged effect of
higher interest rates, trade tensions, and the government shutdown.
Expected disruptions in tax refunds may also have a temporary
effect on first quarter spending.

Barry C. Knapp, Managing Partner, Ironsides


Macroeconomics: Inflation volatility is near post-WWII lows. Price
stability justifies the pause. Non-existent correlation of CPI
components implies exogenous factors like global excess goods
capacity and technology adoption in some service sectors explains
disinflation rather than central bank credibility.

David Kotok, Chairman and Chief Investment Officer,


Cumberland Advisors: A technical issue. The Fed has to finish
getting IOER to a floor in a corridor. The easy way to do that is
notch 5 basis points each hike. If the Fed doesn't hike this transition
becomes more difficult.

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March 20, 2019

Subodh Kumar, President, Subodh Kumar & Associates:


Contrary to our expectations for better balance, intense interplay
remains between quantitative ease-driven central bank policy and
capital market activity. For instance, and as often in this cycle, when
concern builds on equities or elsewhere, major sovereign country
benchmark fixed-income yields decline, even flirting with zero or less
in Europe and Japan. It is constructive that the major central banks
appear cohesive, unlike famously in the late 1980s. Still and despite
enormous collective and individual size, asset managers appear
reluctant to counter central bank assumptions. It contrasts with late
1980s hedge funds activity. It could make capital markets now
especially vulnerable to external shocks. For instance, dissonance
exists in fiscal policy, in global politics, and trade relations. Political
misunderstandings could arise. Such market realities make
diversification essential, including above benchmark cash and
precious metals in asset and equity mix. Developments in many
financials underscore their crucial role for equities. On core growth
and defensiveness, we favor Info Tech over Consumer Staples. We
overweight Energy majors attuned to prospering even when crude oil
was low pre-1970.

Donald Luskin, Chief Investment Officer, Trend Macrolytics:


According to our quant model for predicting elections, Trump will win
in 2020 by a margin of 300 electoral college votes if the economy is
as strong then as it is now.

Drew T. Matus, Chief Market Strategist, MetLife Investment


Management: Productivity on the rise is unusual behavior late
cycle. Rising productivity would suggest the expansion can continue
for some time.

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FED SURVEY
March 20, 2019

Rob Morgan, Chief Investment Officer, Sethi: Fed Chair Powell,


in his semiannual report to Congress last month, said the Fed will be
'data dependent' as the economic outlook evolves. The first data
point after those comments was a very weak jobs report for
February. The committee will begin to more aggressively debate if
they should stop the rate hike campaign now.

Joel L. Naroff, President, Naroff Economic Advisors: Hard to


see what will cause growth to accelerate but there are plenty of risks
that could cause growth to slow.

Lynn Reaser, Chief Economist, Point Loma Nazarene


University: With inflation benched, while the economy is still
growing, the Fed does not need to contribute to any March madness.
It can monitor Brexit, U.S.-China trade talks, and signs of a weaker
or stronger domestic economy before choosing its next play.

John Ryding, Chief Economist, RDQ Economics: The Fed's


easing pivot has raised inflation risks. I still think the pivot has not
been convincingly explained and with the market leaning to an ease
but crosscurrents fading (market recovery) and growth likely to
remain solid, there is some risk of disruption later in the year as the
Fed swings back to a rate hike.

Richard I Sichel, Senior Investment Strategist, The


Philadelphia Trust Company: A reasonable trade deal with China
is priced into the stock market, as is the tempered Fed policy. The
economy remains quite strong, interest rates should stay relatively
low, and corporate earnings, we would expect, will surprise on the
upside. All these positive factors need to be weighed against the
toxic political scene, which is likely to deteriorate further as
November 2020 grabs even more headlines. Stocks should end the
year with a respectable gain.

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FED SURVEY
March 20, 2019

Allen Sinai, Chief Global Economist and Strategist, Decision


Economics: Unchanged territory for the longest-ever expansion,
still looking functionally very young.

Hank Smith, Co-Chief Investment Officer, Haverford Trust


Company: If Trump wants to be a two-term president, he needs to
make a China trade deal and start lowering tariffs across the board.
This will cause business confidence to rise and capital spending to
increase, stimulating the economy.

Richard D. Steinberg, CFA, Chief Investment Officer,


Steinberg Global Asset Management: A resolution to the China
trade conflict, even if it is not overly robust, may act as a catalyst to
free up corporate future spending and outlook, both here and in
Europe. We anticipate a delay in the talks. Ultimately, however, we
feel a trade deal can be accomplished that neither party will love nor
hate.

Diane Swonk, Chief Economist, Grant Thornton: Trade tensions


have added insult to injury to the global slowdown. The key to how
bad that gets and what it means to the U.S. is China, and whether
they can right the ship. The law of gravity applies to all countries,
including China.

Mark Vitner, Managing Director & Senior Economist, Wells


Fargo Securities: With rate hikes on hold, businesses have a bit of
breathing room. Prior to the Fed's policy pivot, many firms appeared
set to pull back on investment and hiring, due to rising anxieties
surrounding Brexit, China's economic slowdown, the trade talks, and
slower growth in Germany and Italy.

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FED SURVEY
March 20, 2019

Scott Wren, Senior Global Equity Strategist, Wells Fargo


Investment Institute: Stocks are at or near "fair value" for this
point in time but need some combination of a good U.S.-China trade
deal (just buying more soybeans and cars won't do it ... stocks will
go down on that) and signs of stabilization in the European economy
(the recent industrial production data was a start). Expansion is
likely not over and we continue to play this by leaning toward the
more cyclical sectors of the market like Industrials, Cons.
Discretionary and Technology. Some slight risk reduction in
portfolios is prudent here but we do not want to get defensive.

CNBC Fed Survey – March 20, 2019


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