cnbc fed survey, december 15, 2015

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CNBC Fed Survey – December 15, 2015 of 27

FED SURVEYDecember 15, 2015

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 werecollected on December 10-11, 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 thosewho did accept our invitation.

1. Will the Federal Reserve raise the federal funds rate at

its December meeting?

95%

5%

0%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Yes No Don't know/unsure





2. When do you believe the Fed will first increase the fedfunds rate? (Only asked if response was “no” to previous

question.)

50%

50%

0% 10% 20% 30% 40% 50% 60%

Jan 16

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan 17

Feb

Mar

After Mar 17





3. How many times will the Federal Reserve hike rates nextyear (2016)?

2%

12%

29%

21%

29%

7%

0% 5% 10% 15% 20% 25% 30% 35%

0

1

2

3

4

5

6

7

8

9

10

More than 10

Fed will cut rates

Don't know/unsure

Average:

2.8





4. How much will the following areas be helped or hurt by a

Fed rate hike or hikes this year and next? (On scale of -5 to 5)

-0.80

-1.20

0.02

-0.15

-0.20

-0.68

-5 -4 -3 -2 -1 +0 +1 +2 +3 +4 +5

Stock prices

Bond prices

Consumer spending

Business investment

Overall economic growth

Housing

Average response

Hurt Neutral Helped





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

2311

2296

2247

2259

2293

2254

2159

2166

2140

2223

2,050

2,100

2,150

2,200

2,250

2,300

2,350

Dec 16 Jan 27'15

Mar 17 April 28 Jun 16 Jul 28 Sept 16 Oct 27 Dec 15

Survey Dates

December 31, 2016 December 31, 2017

December 31, 2017





6. What do you expect the yield on the 10-year Treasurynote will be on … ?

3.52%

3.04%

3.14%

2.89%

3.24%

3.17%

2.88%

2.67% 2.67%

3.09%

2.0%

2.5%

3.0%

3.5%

4.0%

Dec 16 Jan 27'15

Mar 17 April 28 Jul 16 Jul 28 Sept 16 Oct 27 Dec 15

Survey Dates

December 31, 2016 December 31, 2017

December 31, 2017





7. What is your forecast for the year-over-year percentagechange in real U.S. GDP for …?

Jan

28,'14

Mar

18

Apr

28Jun 4

Jul

29

Sep

16

Oct

28

Dec

16

Jan

27,'15

Mar

17

April

28

Jun

16

Jul

28

Sept

16

Oct

27

Dec

15

2015 +2.90 +3.02+3.00 +2.81 +2.75 +2.90 +2.90 +3.02 +2.99 +2.69 +2.70 +2.25 +2.41 +2.43 +2.32 +2.29

2016 +2.88 +2.80 +2.84 +2.81 +2.78 +2.70 +2.64 +2.60 +2.45

2017 +2.43

+2.90%

+3.02%+3.00%

+2.81%

+2.75%

+2.90%+2.90%

+3.02%

+2.99%

+2.69%

+2.70%

+2.25%

+2.41%+2.43%

+2.32%

+2.29%

+2.88%

+2.80%

+2.84%

+2.81%

+2.78%

+2.70%

+2.64%

+2.60%

+2.45%+2.43%

2.1%

2.2%

2.3%

2.4%

2.5%

2.6%

2.7%

2.8%

2.9%

3.0%

3.1%

2015 2016 2017

December 31, 2017





8. What is your forecast for the year-over-year percentagechange in the headline U.S. CPI for …?

2.02%

2.29%2.27%

2.01%

1.74%

1.17%

1.01%1.00%

1.17%1.10%

0.83%

0.63%

0.84%

2.17%

2.07%

2.08%

1.96%

2.29%

2.17%

1.89%

1.75%

1.88%

2.12%

0.5%

1.0%

1.5%

2.0%

2.5%

Jun 4Jul 29 Sep

16

Oct

28

Dec

16

Jan

27,'15

Mar

17

April

28

Jun

16

Jul 28 Sept

16

Oct

27

Dec

15

Survey Dates

2015 2016 2017

December 31, 2017





9. Assuming the Federal Reserve raises the fed funds targetrange to between 0.25% and 0.50% at its December

meeting, where do you expect the fed funds rate to tradeon average until the next meeting?

0.00

0.20

0.40

0.60

0.80

1.00

1.20

Responses sorted by size

Average: 0.37%





After an initial hike, when do you believe the Fed will nextincrease the fed funds rate?

3%

5%

58%

5%

3%

20%

3%

3%

3%

0% 10% 20% 30% 40% 50% 60% 70%

Jan 16

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan 17

Feb

Mar

After Mar 17

Average:

April 2016





10. When do you expect the Fed to allow its balancesheet to decline?

Survey DateBalance Sheet

Average Forecast

April 28, 2014 survey October 2015

June 4 survey March 2016

July 29 survey December 2015

August 20 survey Not asked

September 16 survey December 2015

October 28 survey January 2016

December 16 survey February 2016

Jan. 27, 2015 survey April 2016

March 17 survey April 2016

April 28 survey May 2016

June 16 survey July 2016

July 28 survey June 2016

August 25 survey September 2016

September 16 survey August 2016

October 27 survey November 2016

December 15 survey December 2016





11. Assuming a hike at the December meeting, how

would you characterize the Fed's monetary policy?(Previously: How would you characterize the Fed's current monetary poli

28%

49%

46%

49%

44%

39%

50%

54%

50%

60%

54%

64%

49%43%

43%

49%

43%

49% 50%

47%

32%

44%

35%

47%

32%

23%

33%

17%

6%

3% 3% 3%

6% 5% 6%

4%

8%

8%

13%

3%

3%

6% 5% 6%

3%

8%

6%

3%

0%

10%

5%

10%

0%

10%

20%

30%

40%

50%

60%

70%

Jul 31,

'12

Jul 29,

'14

Aug 20 Sep 16 Oct 28 Dec 16Jan 27,

'15

Mar 17 Apr 28 Jun 16 Jul 28 Sept

16

Oct 27 Dec

Too accommodative Just right Too restrictive Don't know/unsure

Too accomodative

Don't know/unsure

Too restrictive

Just right





12. Where do you expect the fed funds target rate will beon … ?

1.99%

2.13%

2.04%

1.93%

1.75%

1.84%

1.46%

1.56%

1.41%

1.12%

1.17%

0.91% 0.90%

1.61%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Aug20

Sep16

Oct28

Dec16

Jan27,

'15

Mar17

April28

Jun16

Jul 28 Aug25

Sept16

Oct27

Dec15

Dec 31, 2016 Dec 31, 2017

December 31, 2017





13. At what fed funds level will the Federal Reserve stophiking 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%

2.85%

3.06%

2.98%

2.79%

2.69%2.65%

2.58%

2.0%

2.5%

3.0%

3.5%

4.0%

Aug

20

Sep

16

Oct

28

Dec

16

Jan

27,'15

Mar

17

Apr

28

Jun

16

Jul

28

Aug

25

Sept

16

Oct

27

Dec

15

Survey Dates





14. When do you believe fed funds will reach itsterminal rate?

Survey Date Forecast

August 20 survey Q4 2017

September 16 survey Q3 2017

October 28 survey Q4 2017

December 16 survey Q1 2018

Jan. 27, 2015 survey Q1 2018

March 17 survey Q4 2017

April 28 survey Q1 2018

June 16 survey Q1 2018

July 28 survey Q2 2018

August 25 survey Q3 2018

September 16 survey Q1 2018

October 27 survey Q3 2018

December 15 survey Q1 2018





15. Has the U.S. stock market already discounted a fedfunds rate hike by the Federal Reserve this year?

56%53% 53%

47%

61%

50%

55%56%

33%

80%

36%38%

47%

50%

39% 38%36%

38%

59%

21%

8%9%

0%

3%

0%

12%10%

6%8%

0%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Dec 16 Jan 27 Mar 17 Apr 28 Jun 16 Jul 28 Aug 25 Sep 16 Oct 27 Dec 15Survey dates


Yes

No

Don't know/unsure





Has the U.S. bond market already discounted a fed fundsrate hike by the Federal Reserve this year?

42%

67%

62%

43%

60%

26%

85%

56%

33%

35%

52%

40%

72%

15%

3%

0%

3%5%

0%3%

0%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Apr 28 Jun 16 Jul 28 Aug 25 Sep 16 Oct 27 Dec 15Survey dates


Yes

NoDon't know/unsure





16. What is the single biggest threat facing the U.S.economic recovery?

SurveyDate

E u r o p e a n

r e c e s s i o n /

f i n a n c i a l c r i s i s

T a x /

r e g u l a t o r y p o l i c i e s

S l o w j o b g r o w t h

I n f l a t i o n

D e f l a t i o n

D e b t c e i l i n g

R i s e i n i n t e r e s t r a t e s

G e o p o l i t i c a l r i s k s

G l o b a l e c o n w e a k n e s s

S l o w w a g e g r o w t h

T e r r o r i s t a t t a c k s i n t h e

U . S .

O t h e r

D o n ' t k n o w /

u n s u r e

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%

April 28 3% 11% 8% 3% 0% 0% 6% 11% 28% 8% 19% 3%

Jun 16 3% 17% 3% 0% 0% 0% 14% 25% 22% 6% 11% 0%

Jul 28 6% 21% 9% 0% 0% 0% 12% 6% 29% 9% 9% 0%

Sept 16 0% 16% 2% 0% 4% 0% 0% 8% 45% 8% 14% 2%

Oct 27 0% 8% 5% 3% 8% 0% 8% 13% 41% 10% 5% 0%

Dec 15 0% 10% 5% 0% 0% 0% 8% 10% 44% 5% 3% 15% 0%





17. In the next 12 months, what percent probability doyou place on the U.S. entering recession? (0%=No

chance of recession, 100%=Certainty of recession)

Aug11,'11

Sep19

Oct31

Jan23,'12

Mar16

Apr24

Jul31

Sep12

Dec11

Jan29,'13

Mar19

Apr30

Jun18

Jul30

Sep6

Oct29

Dec17

Jan28'14

Mar18

Apr28

Jul29

Sep16

Oct28

Dec16

Jan27'15

Mar17

April28

Jun16

Jul28

Sept16

Oct27

De15

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 14.7 15.1 17.4 18.6 22.1 22.

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%

14.7%

15.1%

17.4%

18.6%

22.1%

22.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Survey Dates





18. Please rate the members of the Federal Open MarketCommittee on a scale of 0 to 10, with 0 being the most

dovish and 10 being the most hawkish.

2.33

2.91

3.18

3.26

3.69

3.76

4.47

4.48

5.06

5.09

6.28

6.53

7.47

7.76

0 1 2 3 4 5 6 7 8 9 10

Charles L. Evans, Chicago

Lael Brainard, Board of Governors

Eric Rosengren, Boston

William C. Dudley, NY, Vice Chairman

Janet L. Yellen, Board of Governors, Chair

Daniel K. Tarullo, Board of Governors

Jerome H. Powell, Board of Governors

John C. Williams, San Francisco

Dennis P. Lockhart, Atlanta

Stanley Fischer, Board of Governors

Loretta J. Mester, Cleveland

James Bullard, St. Louis

Esther L. George, Kansas City

Jeffrey M. Lacker, Richmond

Averages:

2015 voters

4.28

2016 voters

4.66

Red=2015 voting member Blue=2015 & 2016 voting member Green = 2016 voting member





19. Overall, how do you expect the path of ratenormalization will end for the U.S. economy?

5%

33%

44%

10%

3%

5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Extremelybadly

Somewhatbadly

Neither wellnor badly

Somewhatwell

Extremelywell

Don'tknow/unsure





19. What is your primary area of interest?

Comments:

John Augustine, The Huntington National Bank: Six years into

this economic cycle, ZIRP is now penalizing savers more than it isrewarding borrowers.

Jim Bianco, Bianco Research: No one has successfully gotten offzero. The Japanese tried in 2006 (hike once and then cut). The ECB

tried in 2010 (hike once and then cut to negative). What the Fed isabout to do is unprecedented.

Peter Boockvar, The Lindsey Group: Unfortunately monetary

policy will be the number one influence on the economy and marketsin 2016 to my extreme dismay, but it is what it is. I put a zeroprobability that the Fed's attempt to normalize policy will gosmoothly.

Economics50%

Equities20%

FixedIncome

13%

Currencies3%

Other15%





Lou Brien, DRW Trading Group: The previous rate hike cycledemonstrated the Fed has little influence over the long end of the

curve. Thus the 10-year yield reacts to the first derivative of Fedpolicy, the effect that it might have on the economy, particularly

inflation. It is notable that even as the market has high degree ofconfidence that a rate hike is coming, the 10-year yield is closer to2% than it is 2.5% or 3%.

Robert Brusca, Fact and Opinion Economics: The economy hasdeteriorated and is deteriorating. Oil is unraveling. There are NO Fedmembers talking about waiting. The Fed hikes rates with a low

probability of inflation getting to 2% on its horizon. Most in themarkets want a hike, but the Fed hiking rates in this situation isundermining itself. Its desire to be data dependent and to haveforward guidance too has resulted in a severe case of Fed-zosphrenia.

Thomas Costerg, Standard Chartered Bank: We remain skepticalthat the Fed will undertake a multi-year linear tightening path. Ourforecast is for only two hikes, in December and March; we see then

the Fed pausing in June and September 2016. Total debt is high,the US economic cycle is mature, the USD is strong, and inflation isstructurally soft. Growth could weaken by end-2016, and growth

risks then could prompt the Fed to ease policy again. We think theFed will cut rates in December 2016; by March 2017 the FFTR couldbe back at 0-0.25%. We think full QE reinvestment will continue untilat least 2018.

John Donaldson, Haverford Trust Co.: The debate regarding the

Fed is whether a hike is simply a move away from extraordinarily lowrates to less extraordinarily low rates or "a rate hike is a rate hike."

We are in the first camp and believe that this hike is not in the sameleague as most past tightening, especially when the impact on long-term rates is likely to be muted.





Dennis Gartman, The Gartman Letter: In the end we shall seethat it is nonsense that equities and energy prices move downward

in tandem and we shall eventually understand that increasedsupplies of crude oil and nat gas are hugely beneficial; however, in

the interim, as Lord Keynes said, "The markets can remain irrationalfar longer than we can remain solvent."

Stuart Hoffman, PNC Financial Services Group: Fed comes out

of self-induced 7 year rate coma by raising the funds rate inDecember in response to much improved US economy vital signs.

Art Hogan, Wunderlich Securities: What almost every strategistthat has put out a 2016 outlook is getting wrong about the path ofnormalization is that it will not be metronomic, as was the case inthe last cycle. It will be gradual and data dependent. This is not theFOMC of 2004-2006 when we had 25 basis points increases at every

meeting. The other thing to remember is that 1/3 of active investorshave never seen a rate hike and think it is the end of the world. It isnot.

Timothy Hopper, TIAA-CREF: The Fed disappointed markets bynot raising in September. That mistake won't be repeated at thismeeting. Last week, the ECB disappointed markets by not easing

enough. That mistake won't be repeated either. Look for furtherECB easing during the first half of 2016.

John Kattar, Ardent Asset Advisors: A rate hike looked like a

done deal after the last jobs number, but market volatility, highyield, and geopolitics have made it a close call. My non-consensus

view is pass in Dec. with a hike (finally) in March.

David Kotok, Cumberland Advisors: All the forces for disinflationor deflation are public and identified, so the surprise could be thatinflation comes back more quickly than expected and will be morevirulent when it does.





Subodh Kumar, Subodh Kumar & Associates: A rate increase

program likely from the Fed and global growth uncertainty add up tomore volatility until mid- 2016. The cost of financial leverage has

already been rising since early 2015. Many present market problemsrelate to Wall Street assuming more growth than companies candeliver without resorting to excess financial engineering. Capitalmarket recovery, including commodities and more stability in

currencies in second half of 2016, will likely depend on the globalgrowth outlook for 2017. Fixed income is likely to remain underpressure and constrain equity valuation.

Guy LeBas, Janney Montgomery Scott: The big question iswhether inflation will emerge, bringing the PCE back to 2%.Unfortunately, we as an economic society can no longer say whatcauses inflation--QE, wages, and the dollar have less than 20%

explanatory power post-recession--so inflation is essentially arandom variable. Either it doesn't emerge and we get 2 rate hikes in2016 or it does and we get 6 rate hikes. The latter scenario is toughfor intermediate duration bonds in particular.

John Lonski, Moody's: Never before has the Fed initiated a seriesof rate hikes amid a high-yield spread above 600 bp, a rising default

rate, flat to lower profits, sluggish business sales, and severeindustrial commodity price deflation.

Donald Luskin, Trend Macrolytics: The Fed is relying entirely on

the ol' time religion of the Phillips Curve to hike rates in the face ofrecord low inflation, collapsing inflation expectations, a soggy labor

market, and a weakening economy. As usual, a policy error. It willbe quickly reversed, as was Trichet's in 2011.





Rob Morgan, Sethi Financial Group: The time is ideal for a Fedrate hike. Global markets are not gyrating as they were in the fall,

and the Fed needs to begin gathering ammo (by hiking rates) tocombat the next recession.

Chad Morganlander, Stifel Nicolaus (Washington CrossingAdvisors): The deceleration of global growth (external factors) willkeep the Federal Reserve glide path below expectations for 2016.

Lynn Reaser, Point Loma Nazarene University: A succession ofinterest rate hikes could quickly unveil the corners of high leverage

in the U.S. economy and financial markets.

John Ryding, RDQ Economics: The Fed has delayed the beginningof renormalization and risks having to play catch up in 2016, raisingrates more quickly than the market expects.

Allen Sinai, Decision Economics: Where's the inflation? Inflationwill call the tune for much of what happens in 2016.

Diane Swonk, Mesirow Financial: Yellen is a veteran of the1990s; she knows the impact a prolonged expansion can have onliving standards in a low inflation environment. She sees a chance to

actually regain much of what was lost to the crisis by overshootingon unemployment on the downside. This is one of the most powerfulreasons for gradualism.

Peter Tanous, Lynx Investment Advisory: Every taxi driver in NYknows the Fed will raise rates this month, so it is discounted in the

market. But the rate increase may well mark a major change ininterest rate direction--a change that may reverse the trend of

downward rates that started in 1980. What happens when youreverse a downward trend of 35 years? No one knows!! But it maynot be very good.




Scott Wren, Wells Fargo Investment Institute: Inflation is goingto stay low in 2016 and wage growth will stay very modest.

Earnings growth will likely be 6% to 7% next year. This cyclical bullmarket has more room to run in our opinion. Valuations are not

stretched. Nobody is chasing this market as we sit just 4% belowthe all-time record high in the S&P 500. Retail investors areunderinvested in stocks and sitting on too much cash. They havenot been stepping in to buy in any meaningful volume on pullbacks

over the last 5 years. They remain cautious, and, in general, havelargely missed the opportunity presented to them by the big rally offthe March 2009 lows. We continue to believe downside volatility

presents buying opportunities. We want our clients to be optimisticon the outlook for the stock market in 2016. We want themstepping in and putting money to work in equities, especially ondownside days and weeks.

cnbc fed survey, december 15, 2015

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