CNBC Fed Survey September 16, 2014

Page 1 of 29

FED SURVEY
September 16, 2014
These survey results represent the opinions of 37 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 September 11-13, 2014. 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. By how much do you believe the Fed will, on net, increase or
decrease the size of its balance sheet in 2015?



-$104
-$146
$24
$60
-$83
-$200
-$150
-$100
-$50
$0
$50
$100
B
i
l
l
i
o
n
s

Mar 18 Apr 28 Jul 29 Aug 20 Sep 16



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
2. Will the Federal Reserve vote in October to end its QE program?


95%
5%
0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Yes No Don't know/unsure



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
3. What is the probability the Fed will begin a new QE program in
the 12 months or two years after it concludes the current QE
program? (0%=No chance of new QE, 100%=Certainty of new QE)

0%
10%
20%
30%
40%
50%
60%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Chance of new QE
12 months 24 months
Averages:

12 months:
10.0%

24 months:
14.0%



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
4. The Fed will remove the phrase considerable time from its
monetary policy statement in ...


41%
24% 24%
11%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
September October December After December Don't
know/unsure



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
5. Overall, how do you rate the clarity and credibility of Fed
communications?

60%
61%
63%
68%
64%
62%
73%
39% 39%
38%
32%
36%
35%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Oct 29 Dec 17 Jan 28 Mar 18 Apr 28 Jul 29 Sep 16
Survey dates
Very/somewhat clear and credible Somewhat not/not very clear and credible



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
6. Which of these is the bigger risk to your forecasts for Fed policy
in 2014?


26% 26%
40%
9%
31%
22%
47%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Fed will be more
dovish than I
expect
Fed will be more
hawkish than I
expect
Risks are balanced Don't know/unsure
Jul 29 Sep 16



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
Which of these is the bigger risk to your forecasts for Fed policy in
2015?

49%
34%
14%
3%
53%
39%
8%
0%
0%
10%
20%
30%
40%
50%
60%
Fed will be more
dovish than I
expect
Fed will be more
hawkish than I
expect
Risks are balanced Don't know/unsure
Jul 29 Sep 16



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
7. 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%
36%
4%
8%
4%
0%
34%
40%
6%
11%
9%
0%
20%
60%
3%
6%
9%
3%
0% 10% 20% 30% 40% 50% 60% 70%
Considerably more slack now
Modestly more slack now
No difference
Modestly less slack now
Considerably less slack now
Don't know/unsure
July 29 August 20 Sep 16



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
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?


12%
56%
8%
16%
4%
4%
9%
60%
14%
9%
9%
0%
8%
64%
8%
14%
3%
3%
0% 10% 20% 30% 40% 50% 60% 70%
Considerably more slack now
Modestly more slack now
No difference
Modestly less slack now
Considerably less slack now
Don't know/unsure
July 29 August 20 Sep 16



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
8. What best describes your view of the most likely outcome from
the current period of extraordinary monetary policy?


34% 34%
26%
6%
17%
44%
22%
17%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
It will end badly
with one or more of
the following: a
stock market crash,
high inflation,
recession
The Fed will
navigate a smooth
transition to more
normal policy
Odds are evenly split
between either
outcome
Don't know/unsure
July 29 Sep 16



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
9. Where do you expect the S&P 500 stock index will be on ?


1857
1913
1924
1937
1956
2000
2032
2017
2029
2053
2109 2075
2149
1,800
1,850
1,900
1,950
2,000
2,050
2,100
2,150
2,200
Dec 17 Jan 28 '14 Mar 18 Apr 28 Jun 4 July 29 Sep 16
Survey Dates
December 31, 2014 June 30, 2015 December 31, 2015



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
10. What do you expect the yield on the 10-year Treasury note
will be on ?


3.44%
3.37%
3.32%
3.21%
2.90%
2.83%
2.76%
3.54%
3.24%
3.15% 3.16%
3.43%
3.45%
2.0%
2.5%
3.0%
3.5%
4.0%
Dec 17 Jan 28 '14 Mar 18 Apr 28 Jun 4 Jul 29 Sep 16
Survey Dates
December 31, 2014 June 30, 2015 December 31, 2015



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
11. What is your forecast for the year-over-year percentage
change in real U.S. GDP for ?



Jan
29,
'13
Mar
19
Apr
30
Jun
18
Jul
30
Sep
17
Oct
29
Dec
17
Jan
28,
'14
Mar
18
Apr
28
Jun 4
Jul
29
Sep
16
2014 +2.56 +2.60 +2.62 +2.56 +2.52 +2.63 +2.53 +2.62 +2.77 +2.78 +2.75 +2.33 +1.89 +2.3
2015 +2.90 +3.02 +3.00 +2.81 +2.75 +2.9
+2.56%
+2.60%
+2.62%
+2.56%
+2.52%
+2.63%
+2.53%
+2.62%
+2.77%
+2.78%
+2.75%
+2.33%
+1.89%
+2.3%
+2.90%
+3.02%
+3.00%
+2.81%
+2.75%
+2.9%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2014 2015



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
12. What is your forecast for the year-over-year percentage
change in the headline U.S. CPI for ?


1.78%
2.02%
1.99%
2.02%
2.29%
2.27%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
Jun 4 Jul 29 Sep 16
Survey Dates
2014 2015



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
13. When do you expect the Fed to allow its balance sheet to
decline?

Note: In the April survey, the question was phrased as: When do you believe the Fed will begin
reducing the size of its balance sheet?
0%
5%
10%
15%
20%
25%
30%
O
c
t
N
o
v
D
e
c
J
a
n

'
1
5
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
J
u
l
A
u
g
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n

'
1
6
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
J
u
l
A
u
g
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n

'
1
7
A
f
t
e
r

J
a
n

Apr 28 Jun 4 Jul 29 Sep 16

Averages:
April 28 survey:
October 2015

June 4 survey:
March 2016

June 29 survey:
December 2015

Sept. 16 survey:
December 2015



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
14. When do you think the FOMC will first increase the fed funds
rate?



0%
10%
20%
30%
40%
50%
60%
April 28 Jun 4 Jun 29 Aug 20 Sep 16
Averages:
April 28 survey:
July 2015

June 4 survey:
August 2015

July 29 survey:
August 2015

Aug 20 survey:
July 2015

Sep 16 survey:
June 2015





CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
15. How would you characterize the Fed's current monetary
policy?


28%
43%
17%
13%
49%
43%
6%
3%
46%
49%
3%
3%
49%
43%
3%
6%
0% 10% 20% 30% 40% 50% 60%
Too accommodative
Just right
Too restrictive
Don't know/unsure
July 31, 2012 July 29, 2014 Aug 20 Sep 16



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
16. 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
28
Jun 4 Jul 29
Aug
20
Sep
16
Dec 31, 2014 0.28%0.21%0.21%0.20%0.19%0.15%0.27%0.17%0.21%0.16%0.14%
Jun 30, 2015 0.50%0.39%0.40%
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%
Jun 30, 2016 1.53%1.56%
Dec 31, 2016 1.99%2.13%
0.28%
0.21% 0.21%
0.20%
0.19%
0.15%
0.27%
0.17%
0.21%
0.16%
0.14%
0.50%
0.39%
0.40%
0.97%
0.92%
0.82%
0.70%
0.72%
0.83%
0.99%
0.68%
1.05%
0.89%
0.98%
1.53%
1.56%
1.99%
2.13%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Dec 2016
June 2016
Dec 2015
June 2015
Dec 2014



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
17. At what fed funds level WILL/SHOULD the Federal Reserve
stop hiking rates in the current cycle? That is, what will/should
be the terminal rate?


3.16%
3.44%
3.20%
3.39%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Will Should
Aug 20 Sep 16



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
18. When do you believe fed funds will reach its terminal rate?



0%
5%
10%
15%
20%
25%
30%
35%
40%
Aug 20 Sep 16
Average:

Aug 20 survey:
Q4 2017

Sep 16 survey
Q3 2017




CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
19. How much concern do you have that each of the following
could create wider global risks? (1=Not concerned at all,
10=Highest level of concern)


5.4
5.0
4.7
3.1
0
1
2
3
4
5
6
7
8
9
10
Economic
weakness in
Europe
Trouble between
Russia and
Ukraine
ISIS insurgency
and the U.S.
response
Scottish
independence



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
20. How big a threat to the U.S. economy are "tax inversions," in
which a U.S. company merges with a foreign company and
moves its tax address overseas? (1=No threat at all,
10=Enormous threat)

31%
25%
22%
13%
6%
0%
3%
0% 0% 0%
0%
5%
10%
15%
20%
25%
30%
35%
1 2 3 4 5 6 7 8 9 10
Level of concern
Average:
2.5



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
21. Whats the best solution for tax inversions?

Other:
Eliminate tax on foreign income for US corporations (and individuals too!)
Legislation to encourage the return of cash of US corporations now held abroad

50%
38%
6%
3% 3%
0%
0%
10%
20%
30%
40%
50%
60%
Wait for
comprehensive
U.S. corporate
tax reform
Lower top U.S.
corporate tax
rate now
Other Raise the
requirement for
foreign
ownership
Don't
know/unsure
None needed
On average, those selecting this option
think the top rate should be lowered to 19%
On average, those selecting this option think
the requirement should be raised to 51%



CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014
22. What is the single biggest threat facing the U.S. economic
recovery?

0% 5% 10% 15% 20% 25% 30% 35%
European recession/financial crisis
Tax/regulatory policies
Slow job growth
High gasoline prices
Overall inflation
Deflation
Debt ceiling
Too little budget deficit reduction
Too much budget deficit reduction
Rise in interest rates
Geopolitical risks
Other
Don't know/unsure
European
recession
/financial
crisis
Tax/regul
atory
policies
Slow job
growth
High
gasoline
prices
Overall
inflation
Deflation
Debt
ceiling
Too little
budget
deficit
reduction
Too
much
budget
deficit
reduction
Rise in
interest
rates
Geopoliti
cal risks
Other
Don't
know/un
sure
Apr 30 20% 31% 20% 2% 0% 2% 2% 2% 9% 11% 0%
Jun 18 15% 28% 20% 2% 3% 3% 0% 2% 13% 13% 0%
Jul 30 8% 30% 22% 4% 0% 2% 2% 0% 4% 10% 14% 4%
Sep 17 4% 27% 22% 7% 2% 0% 4% 2% 4% 18% 7% 2%
Oct 29 8% 29% 24% 3% 3% 3% 3% 3% 5% 8% 13% 0%
Dec 17 5% 32% 29% 5% 2% 0% 2% 2% 2% 15% 2% 2%
Jan 28 '14 7% 21% 30% 2% 2% 0% 0% 2% 2% 12% 21% 0%
Mar 18 10% 23% 26% 3% 3% 5% 0% 0% 8% 5% 18% 0%
Apr 28 3% 26% 21% 0% 3% 5% 0% 3% 3% 8% 18% 13% 0%
Jul 29 12% 29% 12% 0% 6% 3% 0% 0% 0% 12% 12% 12% 3%
Sep 16 6% 26% 29% 0% 6% 3% 0% 0% 0% 6% 11% 11% 3%
Apr 30 Jun 18 Jul 30 Sep 17 Oct 29 Dec 17 Jan 28 '14 Mar 18 Apr 28 Jul 29 Sep 16


CNBC Fed Survey September 16, 2014
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FED SURVEY
September 16, 2014


23. 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,
2011
Sep
19
Oct
31
Jan
23,
2012
Mar
16
Apr
24
Jul
31
Sep
12
Dec
11
Jan
29,
2013
Mar
19
Apr
30
Jun
18
Jul
30
Sep
6
Oct
29
Dec
17
Jan
28
2014
Mar
18
Apr
28
Jul
29
Sep
16
Pct. 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
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%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Survey Dates


CNBC Fed Survey September 16, 2014
Page 26 of 29
FED SURVEY
September 16, 2014

24. What is your primary area of interest?


Comments:

Tony Crescenzi, PIMCO: The Fed in the months ahead will begin to
say a long goodbye to its extraordinary monetary accommodation,
keeping its exit more a process than an event, hoping throughout to
keep markets and the economy stable.

John Donaldson, Haverford Trust Co.: Many people seem to
forget we are at zero interest rates. Which would they prefer; a
message from the Fed that the economy has improved enough that
they can begin the process of raising rates or a message that
everything is still so weak that we need to stay at zero? We are still
years in time and hundreds of basis points from a restrictive policy
that could hamper the economy.

Dennis Gartman, The Gartman Letter: The concerns over Russia
and Ukraine are materially over-blown; Russia's army of conscripts is
not capable of over-running even Ukraine, and the fact that the
Economics
50%
Equities
17%
Fixed Income
14%
Currencies
3%
Other
17%


CNBC Fed Survey September 16, 2014
Page 27 of 29
FED SURVEY
September 16, 2014

President of Russia and Ukraine talk far more frequently than is
commonly understood underscores the fact that this situation is not
likely to become more severe than it has been thus far and is far
more likely to become far less severe. Russia and Ukraine "trade"
with one another, and trading partners rarely go to extended war.

Kevin Giddis, Raymond James/Morgan Keegan: The momentum
train towards higher rates is slowly leaving the station. The question
is: How long are the tracks? The Fed will be the principal character in
next year's market moves.

Stuart Hoffman, PNC Financial Services Group: The
"considerable time" reference in the FOMC statement should be
dropped and replaced with something like "current and anticipated
progress toward dual mandate" at the October FOMC meeting when
the end of QE is announced.

Hugh Johnson, Hugh Johnson Advisors: Although the
geopolitical risks are meaningful, they are unlikely to derail the
current stock market-economic cycle. The most substantial risk
(although not imminent) is rising interest rates. We are currently
well away from a level that would endanger the current cycle
although there will be substantial pressure on the Fed to raise rates
in Q1-Q3, 2015. This conclusion is consistent with indicators that
tend to lead economic activity. They are not as yet signaling a turn
in economic output.

John Kattar, Ardent Asset Advisors: The message has been loud
and clear that QE ends in October and rate increases are on the
horizon. In recent years, I give the Fed high marks for transparency
- they keep repeating they will do something and then they do it.
Count me as a believer. Rate increases are coming by March, and
the first step is to remove the calendar guidance from the statement
at this meeting.



CNBC Fed Survey September 16, 2014
Page 28 of 29
FED SURVEY
September 16, 2014

David Kotok, Cumberland Advisors: The markets are not
anticipating that energy prices will fall below the marginal cost of
production in the U.S. The risk of that price decline is rising as
global slowing of growth intensifies.

Subodh Kumar, Subodh Kumar & Associates: Geopolitics and a
Federal Reserve in QE exit lead us to expect volatility and to favor
quality across assets, not the financial engineering once more in
favor. From dislocation risk in Britain to tension with Russia to Middle
East turmoil to European and U.S. fiscal woes, equity and bond
markets have overlooked risk. The Federal Reserve has lacked clarity
but appears in dial back of the over accommodation resulting from
QE2, which is likely to be volatile for too-complacent markets.

Guy LeBas, Janney Montgomery Scott: The one thing that could
send the train veering off course on Wednesday is a decision by
Yellen to talk up risk premia. Bernanke did the same last summer
over concern for the level of yields and the result was problematic
for all investors. This time around it isn't about low yields, but about
complacency in lending markets. With default rates low, we're far
from a danger zone in the credit markets, but Yellen could choose to
point out the problem and try to make it go away early by enforcing
loan pricing discipline.

Rob Morgan, V2V Associates: U.S. corporations that are 'tax
inverting' themselves out of the country show that the nation is
facing the same problem that many states in the Northeast and
Midwest are facing - companies are leaving a hostile tax environment
to go to a friendlier one. Lower the corporate tax rate now, America!

Joel Naroff, Naroff Economic Advisors: The press have done the
Fed's job of preparing the markets for a change in policy so the
FOMC should take advantage of the opening by signaling a tightening
could come sooner rather than later.



CNBC Fed Survey September 16, 2014
Page 29 of 29
FED SURVEY
September 16, 2014

Lynn Reaser, Point Loma Nazarene University: The Fed has
completed an orderly exit from its bond purchase program, but
markets are likely to be much less tolerant of rate hikes. The Fed
might get the timing and amount of rate increases just right, but do
not count on it. Unfortunately, rate increases are likely to be too
soon and too much or too little and too late.

Allen Sinai, Decision Economics: The U.S. economy finally has
"normalized." In a "normal" business expansion, interest rates
should rise. Zero interest rates make little sense in a normal
business expansion.

Hank Smith, Haverford Investments: Even after tapering and the
beginning of the increasing of the fed funds rate, monetary policy
will still be very accommodative for several more years.

Diane Swonk, Mesirow Financial: The Fed is hedging what it sees
as the greatest downside risk to the economy, which is a recession.
It is unclear there is any way out if we skip into another recession.

Peter Tanous, Lynx Investment Advisory: Stock market view of
a world in turmoil: Don't Worry; Be Happy.

Scott Wren, Wells Fargo Advisors: The modest growth/modest
inflation economy we have been living with is unlikely to change over
the next 12-24 months. Stocks need to be bought on any pullbacks.
This cyclical bull market has more room to run over the next 2-3
years.