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CNBC Fed Survey March 17, 2015 Page 1 of 30
FED SURVEY March 17, 2015
These survey results represent the opinions of 38 of the nations top money managers, investment strategists, and professional economists. They responded to CNBCs invitation to participate in our online survey. Their responses were collected on March 12-13, 2015. 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. For U.S. economic growth and corporate earnings, the strength of the dollar is:
13%
76%
11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Positive Negative Don't know/unsure
CNBC Fed Survey March 17, 2015 Page 2 of 30
FED SURVEY March 17, 2015
2. What effect does strength of the dollar have on your GDP growth/core inflation forecast for 2015?
-0.22 -0.22
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
GDP Inflation
Pct
. po
ints
CNBC Fed Survey March 17, 2015 Page 3 of 30
FED SURVEY March 17, 2015
3. As a result of the strength of the U.S. dollar, Fed policy will be:
32%
61%
5%
3%
0%
10%
20%
30%
40%
50%
60%
70%
Easier thanoriginallyforecast
The same asoriginallyforecast
Tighter thanoriginallyforecast
Could go eitherway
Don'tknow/unsure
CNBC Fed Survey March 17, 2015 Page 4 of 30
FED SURVEY March 17, 2015
4. The Fed will remove the phrase patient from its monetary
policy statement in ...
0%
0%
33%
27%
21%
0%
0%
3%
3%
69%
14%
11%
3%
3%
0%
0%
0%
0%
0%
0%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80%
January
February
March
April
June
July
August
September
October
November
December
2016 or later
Won't remove
Don't
know/unsure
Jan 27 Mar 17
CNBC Fed Survey March 17, 2015 Page 5 of 30
FED SURVEY March 17, 2015
5. Relative to an economy operating at full capacity, what best describes your view of the amount of resource slack in the U.S. right now for labor?
48%
34%
20% 18%
16% 16% 13%
36%
40%
60%
69%
55%
50%
63%
4% 6%
3%
0% 0%
6%
11% 8%
11%
6%
5%
24%
19%
4%
9% 9% 8%
5%
9%
3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
July 29 August 20 Sep 16 Oct 28 Dec 16 Jan 27 Mar 17
Considerably more slack now Modestly more slack now
No difference Modestly less slack now
Considerably less slack now
Modestly less slack
Modestly more slack
Considerably less slack
No difference
Considerably more slack
CNBC Fed Survey March 17, 2015 Page 6 of 30
FED SURVEY March 17, 2015
Relative to an economy operating at full capacity, what best describes your view of the amount of resource slack in the U.S. right now for production capacity?
8%
14%
56%
60%
64% 64%
55%
59%
57%
13%
19%
24%
13%
11% 9%
5%
0%
10%
20%
30%
40%
50%
60%
70%
July 29 August 20 Sep 16 Oct 28 Dec 16 Jan 27 Mar 17
Considerably more slack now Modestly more slack now
No difference Modestly less slack now
Considerably less slack now
No difference
Modestly more slack
Modestly less slack
Considerably less slack
Considerably more slack
CNBC Fed Survey March 17, 2015 Page 7 of 30
FED SURVEY March 17, 2015
6. Where do you expect the S&P 500 stock index will be on ?
2017 2029
2053
2109
2066
2093
2122
2058
2075
2149
2111
2194
2187
2128
2250 2248
2199
2311 2296
2247
1,800
1,900
2,000
2,100
2,200
2,300
2,400
Apr 28 Jun 4 July 29 Sep 16 Oct 28 Dec 16 Jan 27 Mar 17
Survey Dates
June 30, 2015 December 31, 2015
June 30, 2016 December 31, 2016
CNBC Fed Survey March 17, 2015 Page 8 of 30
FED SURVEY March 17, 2015
7. What do you expect the yield on the 10-year Treasury note will be on ?
3.54%
3.24%
3.15% 3.16%
2.90%
2.63%
2.14%
2.28%
3.43% 3.45%
3.19%
2.96%
2.54% 2.57%
3.30%
2.80%
2.89%
3.52%
3.04%
3.14%
2.0%
2.5%
3.0%
3.5%
4.0%
Apr 28 Jun 4 Jul 29 Sep 16 Oct 28 Dec 16 Jan 27 Mar 17
Survey Dates
June 30, 2015 December 31, 2015
June 30, 2016 December 31, 2016
CNBC Fed Survey March 17, 2015 Page 9 of 30
FED SURVEY March 17, 2015
8. What is your forecast for the year-over-year percentage change in real U.S. GDP for ?
Jan 28,'14
Mar 18 Apr 28 Jun 4 Jul 29 Sep 16 Oct 28 Dec 16Jan 27,
'15Mar 17
2015 +2.90% +3.02% +3.00% +2.81% +2.75% +2.90% +2.90% +3.02% +2.99% +2.69%
2016 +2.88% +2.80% +2.84%
+2.90%
+3.02% +3.00%
+2.81%
+2.75%
+2.90% +2.90%
+3.02%
+2.99%
+2.69%
+2.88%
+2.80%
+2.84%
2.5%
2.7%
2.9%
3.1%
3.3%
3.5%
2015 2016
CNBC Fed Survey March 17, 2015 Page 10 of 30
FED SURVEY March 17, 2015
9. What is your forecast for the year-over-year percentage change in the headline U.S. CPI for ?
2.02%
2.29% 2.27%
2.01%
1.74%
1.17%
1.01%
2.17%
2.07% 2.08%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
Jun 4 Jul 29 Sep 16 Oct 28 Dec 16 Jan 27, '15 Mar 17
Survey Dates
2015 2016
CNBC Fed Survey March 17, 2015 Page 11 of 30
FED SURVEY March 17, 2015
10. When do you expect the Fed to first increase the fed funds rate and when will it allow its balance sheet to decline?
Survey Date Fed Funds Hike
Average Forecast
Balance Sheet
Average Forecast
April 28, 2014 survey July 2015 October 2015
June 4 survey August 2015 March 2016
July 29 survey August 2015 December 2015
August 20 survey July 2015 Not asked
September 16 survey June 2015 December 2015
October 28 survey July 2015 January 2016
December 16 survey July 2015 February 2016
Jan. 27, 2015 survey September 2015 April 2016
March 17 survey August 2015 April 2016
CNBC Fed Survey March 17, 2015 Page 12 of 30
FED SURVEY March 17, 2015
12. How would you characterize the Fed's current monetary policy?
28%
49%
46%
49%
44%
39%
50%
54%
43%
43%
49%
43%
49% 50%
47%
32%
17%
6%
3% 3% 3%
6% 5%
13%
3%
3%
6% 5% 6%
3%
8%
0%
10%
20%
30%
40%
50%
60%
Jul 31,'12
Jul 29,'14
Aug 20 Sep 16 Oct 28 Dec 16 Jan 27,'15
Mar 17
Too accommodative Just right Too restrictive Don't know/unsure
Too accomodative
Don't know/unsure
Too restrictive
Just right
CNBC Fed Survey March 17, 2015 Page 13 of 30
FED SURVEY March 17, 2015
13. Where do you expect the fed funds target rate will be on ?
Jul
30
Sep
17
Oct
29
Dec
17
Jan
28'14
Mar
18
Apr
28Jun 4
Jul
29
Aug
20
Sep
16
Oct
28
Dec
16
Jan
27,'15
Mar
17
Jun 30, 2015 0.50% 0.39% 0.40% 0.33% 0.31% 0.25% 0.25%
Dec 31, 2015 0.97% 0.92% 0.82% 0.70% 0.72% 0.83% 0.99% 0.68% 1.05% 0.89% 0.98% 0.89% 0.83% 0.73% 0.71%
Jun 30, 2016 1.53% 1.56% 1.48% 1.38% 1.26% 1.27%
Dec 31, 2016 1.99% 2.13% 2.04% 1.93% 1.75% 1.84%
0.50%
0.39% 0.40%
0.33% 0.31%
0.25% 0.25%
0.97% 0.92%
0.82%
0.70% 0.72%
0.83%
0.99%
0.68%
1.05%
0.89%
0.98%
0.89%
0.83%
0.73% 0.71%
1.53% 1.56%
1.48%
1.38%
1.26% 1.27%
1.99%
2.13%
2.04%
1.93%
1.75%
1.84%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Dec 2016
June 2016
Dec 2015
June 2015
CNBC Fed Survey March 17, 2015 Page 14 of 30
FED SURVEY March 17, 2015
14. At what fed funds level will the Federal Reserve stop hiking rates in the current cycle? That is, what will be the terminal rate?
3.16% 3.20% 3.30%
3.17% 3.11% 3.04%
Aug 20 Sep 16 Oct 28 Dec 16 Jan 27, '15 Mar 17
CNBC Fed Survey March 17, 2015 Page 15 of 30
FED SURVEY March 17, 2015
15. When do you believe fed funds will reach its terminal rate?
0%
5%
10%
15%
20%
25%
30%
35%
40%
Aug 20 Sep 16 Oct 28 Dec 16 Jan 27 '15 Mar 17
Average:
Aug 20 survey:
Q4 2017
Sep 16 survey
Q3 2017
Oct 28 survey
Q4 2017
Dec 16 survey
Q1 2018
Jan 27 survey
Q1 2018
Mar 17 survey
Q4 2017
CNBC Fed Survey March 17, 2015 Page 16 of 30
FED SURVEY March 17, 2015
16. How will lower oil prices affect U.S. GDP/core inflation in 2015?
0.27
-0.28
0.36
-0.23
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
GDP Inflation
Pct
. po
ints
Jan 27 Mar 17
CNBC Fed Survey March 17, 2015 Page 17 of 30
FED SURVEY March 17, 2015
17. What is your forecast for WTI crude oil's lowest price in the current downturn?
$39.58 $39.95
$20
$25
$30
$35
$40
$45
$50
Average Forecast
Jan 27 Mar 17
CNBC Fed Survey March 17, 2015 Page 18 of 30
FED SURVEY March 17, 2015
18. What is your forecast for the lowest level of the dollar vs. the euro in the current downturn??
$0.95
$0.80
$0.85
$0.90
$0.95
$1.00
$1.05
$1.10
Average Forecast
Mar 17
CNBC Fed Survey March 17, 2015 Page 19 of 30
FED SURVEY March 17, 2015
19. The ECB will hit its 2% inflation target within:
3%
22%
34%
13% 13%
16%
3%
25%
31%
14%
22%
6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
One year Two years Three years Four years Five or moreyears
Don'tknow/unsure
Jan 27 Mar 17
Averages:
Jan 27 survey: 3.11 years
Mar 17 survey: 3.29 years
CNBC Fed Survey March 17, 2015 Page 20 of 30
FED SURVEY March 17, 2015
20. Relative to the ECB's goal for QE of bringing inflation back towards its 2% target, the size of the program is:
33%
11%
36%
19%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Big enough Just right Not big enough Unsure/don't know
CNBC Fed Survey March 17, 2015 Page 21 of 30
FED SURVEY March 17, 2015
21. How much concern do you have that economic weakness in Europe could create wider global risks? (1=Not concerned at all, 10=Highest level of concern)
5.4 5.4
4.8 5.0
4.7
0
1
2
3
4
5
6
7
8
9
10
Sep 16 Oct 28 Dec 16 Jan 27 '15 Mar 17
CNBC Fed Survey March 17, 2015 Page 22 of 30
FED SURVEY March 17, 2015
22. What is the percentage chance each of the following countries will leave the euro zone in the next 3 years? (0%=No chance of leaving, 100%=Certainty of leaving):
41%
13% 12%
9% 8%
3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Greece Portugal Spain Italy Ireland Germany
CNBC Fed Survey March 17, 2015 Page 23 of 30
FED SURVEY March 17, 2015
23. Has the U.S. stock market already discounted a fed funds rate hike by the Federal Reserve next year?
56%
36%
8%
53%
38%
9%
53%
47%
0% 0%
10%
20%
30%
40%
50%
60%
Yes No Don't know/unsure
Dec 16 Jan 27 Mar 17
CNBC Fed Survey March 17, 2015 Page 24 of 30
FED SURVEY March 17, 2015
24. What is the single biggest threat facing the U.S. economic recovery?
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
European recession/financial crisis
Tax/regulatory policies
Slow job growth
Inflation
Deflation
Debt ceiling
Rise in interest rates
Geopolitical risks
Global economic weakness
Slow wage growth
Other
Don't know/unsure
Europeanrecession/financial
crisis
Tax/regulatory
policies
Slow jobgrowth
InflationDeflationDebt
ceiling
Rise ininterest
rates
Geopolitical risks
Globaleconomicweakness
Slow wagegrowth
OtherDon't
know/unsure
Apr 30 20%31%20%0%2%2%11%0%
Jun 18 15%28%20%3%3%0%13%0%
Jul 30 8%30%22%0%2%2%10%14%4%
Sep 17 4%27%22%2%0%4%18%7%2%
Oct 29 8%29%24%3%3%3%8%13%0%
Dec 17 5%32%29%2%0%2%15%2%2%
Jan 28 '14 7%21%30%2%0%0%12%21%0%
Mar 18 10%23%26%3%5%0%5%18%0%
Apr 28 3%26%21%3%5%0%8%18%13%0%
Jul 29 12%29%12%6%3%0%12%12%12%3%
Sep 16 6%26%29%6%3%0%6%11%11%3%
Oct 28 31%18%15%3%3%0%10%8%8%3%
Dec 16 40%14%14%3%6%0%3%14%3%0%
Jan 27 '15 0%13%9%0%0%0%6%16%41%6%16%0%
Mar 17 6%14%0%3%6%0%6%8%28%17%14%0%
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
CNBC Fed Survey March 17, 2015 Page 25 of 30
FED SURVEY March 17, 2015
FED SURVEY April 30,
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)
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
Series1 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
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%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Survey Dates
CNBC Fed Survey March 17, 2015 Page 26 of 30
FED SURVEY March 17, 2015
FED SURVEY April 30,
26. What is your primary area of interest?
Comments: Robert Brusca, Fact and Opinion Economics: U.S. policy is not looking ahead. The Fed is looking over its shoulder afraid it has done
too much. It is too worried that the economy will 'suddenly accelerate' when there is no evidence of it and no reason to expect it. The Fed has moved into a period of policy irrationality. It is completely out of touch with what its inflation target means and
what missing it means. Thomas Costerg, Standard Chartered Bank: We do not think the removal of "patient" means automatically a hike three months later
in June; after all, pre-commitment is precisely what the Fed wants to avoid. The data will be key. We see the first rate hike in September as we think the Fed may want to see core PCE inflation finding a floor, which is unlikely before the summer. We think the fed funds
rate will level off at 2.0% by Q1-2017. The US business cycle is maturing and we think 2016-17 GDP growth could gradually lose
Economics 57%
Equities 26%
Fixed Income
9%
Currencies 0%
Other 9%
CNBC Fed Survey March 17, 2015 Page 27 of 30
FED SURVEY March 17, 2015
FED SURVEY April 30,
steam, especially if the Fed tightens policy. John Donaldson, Haverford Trust Co.: It is becoming clear that the FOMC is ready to answer the question: Does the economy still
warrant zero interest rates? with a resounding "NO". Neil Dutta, Renaissance Macro Research: All else equal, the dollar is negative for U.S. growth. In the real world, however, all else
is never equal. The rise in the dollar is broadly offset by lower long-term interest rates and oil prices. Thus, as a forecaster, we're forced to stick with the underlying momentum in the economy. While GDP tracking estimates ebb and flow for reasons unrelated to domestic
demand, the employment figures tell us that trend is around 3%. Dan Greenhaus, BTIG: The issue facing the Fed in coming months is the same as the one facing private investors; handicapping the
response to a rate hike in asset markets and, more importantly, money markets, is an incredibly difficult proposition. Stuart Hoffman, PNC Financial Services Group: Bears on the
economy will get boiled in cheap oil. Weak retail sales in Jan and Feb are deja vu all over again as will be a strong rebound in sales in March and April as weather returns to normal. Don't sell short the
American consumer! Art Hogan, Wunderlich Securities: The Market has priced in the negative effects of a strong $ and none of the positives that will
come next and be a powerful tailwind John Kattar, Ardent Asset Advisors: Low inflation, a strong dollar, and spotty economic data give the Fed some wiggle room if
they want to delay tightening. But I think their desire to normalize and create some dry powder for the next downturn trumps all. They will move in June.
CNBC Fed Survey March 17, 2015 Page 28 of 30
FED SURVEY March 17, 2015
FED SURVEY April 30,
David Kotok, Cumberland Advisors: Europe's negative interest rates are an awesome and powerful force. Market agents underestimate how much they encourage rising asset prices. They make us very bullish.
Subodh Kumar, Subodh Kumar & Associates: Raw geopolitics like the Middle East, Russia/Ukraine or even in Asia and economic politics like Greece, Argentina and Venezuela appear
underestimated. Adding in Fed changes and dollar gains means the capital markets, like Icarus in Greek mythology, may be flying too high on risk complacency. Restructuring and management quality should focus in holdings.
Guy LeBas, Janney Montgomery Scott: 1) Oil price declines could present a timing issue--energy businesses are cutting capex quickly, but consumers are accumulating savings slowly--that's negative in
the short term, but positive over 4 or more quarters. 2) The single biggest force in the financial world right now is the cash being placed in European investors' hands by the ECB. Money managers aren't being paid to sit on cash, and a portion of those funds will continue
to dribble into the U.S. bond markets. 3) Fed policymakers don't seem to have a good agreement on how a stronger dollar is likely to impact growth and inflation. Our thinking is that the stronger dollar
leads to imported deflation and a modest growth headwind, but a passage in January's FOMC minutes suggested some Fed officials believe otherwise.
John Lonski, Moody's: If the dollar is too strong then U.S. interest rates are too high vis-a-vis the rest of the world. As long as the 10-year German bund yields less than 0.5%, the 10-year US Treasury yield is unlikely to spend much time, if any, above 2.25%.
Joel Naroff, Naroff Economic Advisors: The markets are already assuming a Fed rate hike so dropping the patience term is a no-brainer. Those who haven't figured out that rates are going up and
CNBC Fed Survey March 17, 2015 Page 29 of 30
FED SURVEY March 17, 2015
FED SURVEY April 30,
are waiting to actually see it happen should not be factored into any Fed decision. James Paulsen, Wells Capital Management: Biggest near-term
risk for the Fed is a surprising bounce in foreign economic growth causing the U.S. dollar to peak and oil & other commodity prices to jump. If this happens as wages begin accelerating and as the U.S. unemployment rate nears 5%, Wall Street will increasingly fear the
Fed is far behind the curve. Lynn Reaser, Point Loma Nazarene University: While the Fed may seek a smooth and slow exit from monetary ease, stock and
bond markets, at least initially, will bolt for the door. John Roberts, Hilliard Lyons: We see the major risk of the Fed's eventual interest rate increases is their impact on forward earnings
growth as companies can no longer constantly re-finance debt at ever lower interest rates which has significantly added to corporate profit growth over the past five-plus years. This will eventually result in corporate profit growth declining and not meeting investor
expectations. John Ryding, RDQ Economics: The majority on the FOMC appear
increasingly aware that the economy is approaching full employment with the monetary pedal to the metal. I, like Jim Bullard, fear the Fed has already waited too long and expect hiking to begin in June.
Allen Sinai, Decision Economics: The transition by the Federal Reserve to a focus on raising inflation, raising interest rates, and jettisoning forward guidance is hugely important for all financial markets.
Hank Smith, Haverford Investments: Forget about ECB policy. European economic growth will be sub-average at best until member countries address fiscal structural reforms. What are the odds of that
CNBC Fed Survey March 17, 2015 Page 30 of 30
FED SURVEY March 17, 2015
FED SURVEY April 30,
happening any time soon? Diane Swonk, Mesirow Financial: Low inflation may be secular as well as cyclical in nature, reflecting changes in technology; this
complicates the game plan for the Fed, and how they manage the reach for yield. Mark Vitner, Wells Fargo: The soaring dollar and plunging oil
prices create a lot of noise for policymakers. We may be going back to a time of rolling recessions in certain parts of the economy (the oil patch, the rust belt, etc.) which cannot be effectively resolved with monetary policy.
Scott Wren, Wells Fargo Advisors: Janet Yellen and Company are going to be in no hurry to hike rates. The question as to whether a hike will occur in June or September is splitting hairs. The much
more important question is what will be the speed and magnitude of the hikes. In my opinion, it will take the Fed years to normalize rates. This cyclical bull market still has room to run.