CNBC Fed Survey – October 27, 2015 Page 1 of 31 FED SURVEY October 27, 2015 These survey results represent the opinions of 41 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 October 22-23, 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. Will the Federal Reserve raise the federal funds rate at its October meeting? 0% 95% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Don't know/unsure
These survey results represent the opinions of 41 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 October 22-23, 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.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
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CNBC Fed Survey – October 27, 2015 Page 1 of 31
FED SURVEY October 27, 2015
FED SURVEY April 30,
These survey results represent the opinions of 41 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 October 22-23, 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. Will the Federal Reserve raise the federal funds rate at
its October meeting?
0%
95%
5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Yes No Don't know/unsure
CNBC Fed Survey – October 27, 2015 Page 2 of 31
FED SURVEY October 27, 2015
FED SURVEY April 30,
2. Will the Federal Reserve raise the federal funds rate in 2015?
84%
92%
82%
67%
80%
46%
11%
5%
15%
23%
44%
5%
9% 10% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Apr 28 Jun 16 Jul 28 Aug 25 Sep 16 Oct 27
Yes No Don't know/unsure
CNBC Fed Survey – October 27, 2015 Page 3 of 31
FED SURVEY October 27, 2015
FED SURVEY April 30,
3. If the Fed does not hike this year, which two factors from the following list do you believe will most likely be the reason?
32%
59%
47%
12%
32%
57%
60%
24%
29%
7%
61%
55%
16%
31%
10%
60%
53%
35%
15%
3%
0% 10% 20% 30% 40% 50% 60% 70%
Weak overseas growth
Declining inflation
Weak US economic growth
Concern over market reaction to a hike
Weak payroll growth
Jun 16 Aug 25 Sep 16 Oct 27
CNBC Fed Survey – October 27, 2015 Page 4 of 31
FED SURVEY October 27, 2015
FED SURVEY April 30,
4. How serious a concern is China for the US economy?
0%
7%
21%
16%
12%
12%
16%
16%
0%
0%
0%
16%
20%
18%
10%
12%
18%
6%
0%
0%
3%
8%
28%
10%
10%
20%
20%
3%
0%
0%
0% 5% 10% 15% 20% 25% 30%
1
2
3
4
5
6
7
8
9
1010=
Hig
hes
t le
vel o
f se
rio
usn
ess
1
=No
t se
rio
u s
at
all1
=No
t se
rio
us
at a
ll
Aug 25 Sep 16 Oct 27
Averages:
Aug 25: 5.1
Sep 16: 4.6 Oct 27: 4.7
CNBC Fed Survey – October 27, 2015 Page 5 of 31
FED SURVEY October 27, 2015
FED SURVEY April 30,
5. Is the Fed paying too much attention to extreme market swings in setting the appropriate monetary policy?
43%
49%
8%
60%
40%
0% 0%
10%
20%
30%
40%
50%
60%
70%
Yes No Don't know/unsure
Sep 16 Oct 27
CNBC Fed Survey – October 27, 2015 Page 6 of 31
FED SURVEY October 27, 2015
FED SURVEY April 30,
6. What best describes your view of communication from Fed chair Janet Yellen and from Fed governors and presidents of their views on monetary policy?
8%
34%
50%
8%
20% 25%
50%
5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Talks too much Don't talk enough Talks the rightamount
Don't know/unsure
Yellen Sep 16 Oct 27
64%
4%
28%
4%
80%
5%
13%
3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Talk too much Don't talk enough Talk the rightamount
Don't know/unsure
Fed govs/pres Sep 16 Oct 27
CNBC Fed Survey – October 27, 2015 Page 7 of 31
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FED SURVEY April 30,
7. Where do you expect the S&P 500 stock index will be on … ?
2075
2149
2111
2194 2187
2128
2156 2159
2135
2032
2079
2311 2296
2247
2259
2293
2254
2159
2166
1,900
1,950
2,000
2,050
2,100
2,150
2,200
2,250
2,300
2,350
Jul 29 Sep 16 Oct 28 Dec 16 Jan 27'15
Mar 17 Apr282
Jun 16 Jul 28 Sept16
Oct 27
Survey Dates
December 31, 2015 December 31, 2016
CNBC Fed Survey – October 27, 2015 Page 8 of 31
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8. What do you expect the yield on the 10-year Treasury note will be on … ?
3.43% 3.45%
3.19%
2.96%
2.54%
2.57%
2.33%
2.64%
2.62%
2.40%
2.20%
3.52%
3.04%
3.14%
2.89%
3.24%
3.17%
2.88%
2.67%
2.0%
2.5%
3.0%
3.5%
4.0%
Jul 29 Sep 16 Oct 28 Dec 16 Jan 27'15
Mar 17 April28
Jul 16 Jul 28 Sept16
Oct 27
Survey Dates
December 31, 2015 December 31, 2016
CNBC Fed Survey – October 27, 2015 Page 9 of 31
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9. What is your forecast for the year-over-year percentage change in real U.S. GDP for …?
ahead; communication policy needs to be a strength not a
vulnerability in the system
Mark Vitner, Wells Fargo: She is in a tougher position than most
previous Fed chairs and faces pressure from more constituencies.
Scott Wren, Wells Fargo Investment Institute: Chairwoman
Yellen has a tough road ahead of her. She has been and will
continue to be a dove. She knows there is still slack in the labor
market (otherwise we would see more wage pressure)....and that is
likely to be the biggest factor driving the pace of rate hikes (which
will be very slow). The Chairwoman has not really been tested yet
by the markets but at some point during this long normalization
process that will likely change.
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22. 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)
Comments: Robert Brusca, Fact and Opinion Economics: The Fed needs to clarify in SIMPLE terms what it means. More talk is not better if it is
confusing talk. The Fed needs to take care not to promise beyond what it can deliver. It needs to express simple understandable objectives and to have those objectives reinforced with public statements, not undermined by them. The current statement's
reference to inflation is too obscure. In an environment with weak oil prices and falling commodity prices how could so many members be 'reasonably' sure that inflation would get back to 2% over the 'intermediate term' by end-2015? This is the fact that is inconsistent
with a rate hike this year. It is not inconsistent but rather sane that Fed members are backing away from these earlier strange and unfounded declarations -especially after the papers that were presented this year at Jackson Hole.
John Donaldson, Haverford Trust Co.: The earliest possible liftoff
Economics 58%
Equities 15%
Fixed Income
10%
Currencies
0%
Other
18%
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date for the FOMC is now January. That would likely require a good to very good holiday season for consumer spending combined with a winter without a polar vortex.
Neil Dutta, Renaissance Macro Research: If the labor market continues tightening and the Fed takes a pass at their December meeting, there will have to be a wholesale change in strategy. They would have to abandon the Phillips Curve as a rationale to boosting
their confidence in the inflation outlook. In that case, a March 2016 hike may prove to be too soon. Mike Englund, Action Economics: The pegging of rates at the
zero-bound does more harm than good for the U.S. financial sector. The first 50-100 basis points in tightening, if expectations of future rate increases are contained, will be stimulative on net for the economy.
Kevin Giddis, Raymond James/Morgan Keegan: The Fed continues to act in an appropriate way, depending heavily on the data vs. rhetoric. The fact is, the time to act is ahead of us, and the
Fed chair should get high marks for her vision and leadership. Stuart Hoffman, PNC Financial Services Group: With U.S. stocks
back near recent highs and China easing monetary policy, solid job reports for October and November will finally give the FOMC the "confidence and courage" to start the funds rate on its slow accent over the next 2-3 years.
Art Hogan, Wunderlich Securities: China data is stabilizing, thus the FED should pull liftoff back into 2015.
Constance Hunter, KPMG LLP: Dr. Yellen is faced with the difficult job of stimulating balanced growth in the absence of modestly stimulative fiscal policy. Meanwhile, both structural (falling healthcare costs due to a growing percent of the population on
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Medicaid/Medicare) and cyclical (falling commodity prices due to China's negative demand shock) disinflationary forces are creating noise around the signal of prices. Add to this the apparent lack of productivity growth and it is an exceptionally challenging time to be
a central banker. Hugh Johnson, Hugh Johnson Advisors: No further comments other than to simply reiterate that Chairperson Yellen is doing a
simply fine job during a complex and difficult time. Her ability to integrate domestic and global financial and economic events into a cohesive and sensible policy (in the face of considerable criticism) is commendable. Navigating the next few years under slow domestic
economic conditions, historically low and gradually rising inflation, and very volatile global economic and inflation conditions will be challenging. This is particularly true when domestic fiscal policy will not be helpful. Avoiding 1937-1938 conditions will be important.
Doable; and important. John Kattar, Ardent Asset Advisors: Passing last meeting was a mistake, but a hike this time would compound the error by signaling
that the Fed cares too much about market reaction in setting policy. Subodh Kumar, Subodh Kumar & Associates: With defensive
valuation neither being offered by quintessential equities like Consumer Staples nor by sovereign debt like U.S. Treasuries, we multi-pod asset mix into equities for the next cycle, above average cash, private investments where some control can be exerted and,
current convention notwithstanding, precious metals as hedge. We see political stress, whether global or country or for that matter corporate governance, as needing more attention and diversification. In order to build flexibility and contain risk within our underweight of
fixed income, we favor placing holdings in short to medium duration U.S. Treasurys, high quality corporate, as well as U.K. Gilts. In equities, we believe complacency to be highly clam-like about quantitative ease. We would expect lower than consensus earnings
CNBC Fed Survey – October 27, 2015 Page 30 of 31
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with more focus on quality of delivery. It is likely to mean elevated volatility and channel-like equity market behavior into mid-2016, which differs from the momentum focus of many. In equities overall, we see leadership being determined worldwide by the heavy
weighting of Financial Services; by companies irrespective of sector that have been restructuring earlier than their compatriots; and by exposure to infrastructure (such as within industrials and information technology) rather than consumer concept (whether in discretionary,
staples or social media). On valuation and concept fervor already incorporated, we also now underweight Healthcare. We find duress and restructuring within Energy and Materials to be sufficient to make the stronger companies of interest as over weightings. Our
outlook likely also means a classic cycle, led by performance in the United States equity market and, as is also traditional, stronger emerging market performance being contingent on stronger global GDP growth closer to 4% than the present 3% per year.
Guy LeBas, Janney Montgomery Scott: Between the ECB and the People's Bank of China, 31% of the world's GDP has executed or announced further easing. It's hard to imagine the Fed hiking rates
against the hurricane of foreign easing. Ward McCarthy, Jefferies: The Fed faces a difficult, challenging
environment of balancing domestic and global policy considerations. Rob Morgan, Sethi Financial Group: The Fed correctly avoided beginning the rate hike campaign at its last meeting due to equity
market turmoil. The Committee will start the campaign in December. Joel Naroff, Naroff Economic Advisors: The Fed's communication has been inconsistent and is a major factor in the volatility in
markets. They should just do something and get it over with. Lynn Reaser, Point Loma Nazarene University: Reports of dissent within the Fed are straining its credibility at a time when
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global markets are desperate for leadership and a roadmap. Allen Sinai, Decision Economics: The Federal Reserve should get on with it and clarify the game plan after the first hike.
Hank Smith, Haverford Investments: Throughout this expansion it has paid to take the Fed at its word. Not following through with a rate hike this year reduces the Fed's credibility.
Diane Swonk, Mesirow Financial: October represents an opportunity for Yellen to show her skill in building a consensus; we need to see a more cohesive message on policy going forward.
Mark Vitner, Wells Fargo: The economy is losing momentum in a way that in the past has been consistent with the Fed cutting interest rates, certainly not raising them. To my recollection, I believe the
Federal Reserve has cut the Federal funds rate every time that the ISM manufacturing has fallen back below 50, which may occur in early November. Unfortunately, they have no rates to cut.
Scott Wren, Wells Fargo Investment Institute: We continue to argue that the Fed doesn't really have to do anything with rates in the nearer term but wants to get the ball rolling on the normalization
process. One move in December and then two in the second half of next year is our projection. US Growth is dependable and this should be the Fed's main focus. There will always be an excuse to not hike rates. The markets want certainty and the Fed is laying the
groundwork for a hike late this year....IMO that is why we have seen the robust rally off the recent lows. Mark Zandi, Moody's Analytics: There is an increasing risk that
the Federal Reserve will be too slow in beginning to normalize interest rates, and will need to raise rates much more aggressively in the future.