FED SURVEY

January 29, 2019

These survey results represent the opinions of 46 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 January 24-27, 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 January 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%

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2. After its upcoming meeting, the Federal Reserve's next

directional move will most likely be:
Raise interest rates Lower interest rates
Move to negative interest rates Launch new quantitative easing

100%
100%
100% 100% 100% 100%100%
98% 98% 97%
95% 95%
94%
92%
90%
88% 88%

80%
Raise interest rates: 80% 80%

60%

40%

Lower interest rates: 17%

20% 17%

12%
10%10%
Launch new quantitative easing: 2%
4% 5% 5%
3% 2% 2% 2% 2% 3% 2%

0%
Jan Mar Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep Oct Dec Jan Mar May Jun Jul Sep Nov Dec Jan
27 15 26 14 26 24 20 1 13 31 14 2 13 25 19 31 12 30 20 1 12 31 25 7 18 29
'16 '17 '18

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When will the Federal Reserve take this action?

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

Feb

Mar 7%

Apr 3%

May 3%

Jun 60%

Jul Averages:

Aug 13% Raise:

July
7%
Sep 2019

Oct 3%
13% Lower:
December
Nov 2019

Dec 13%
25%

Jan 13%

After 3%
Jan 2020 25%

Don't
know/unsure 13%

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3. How many times in total will the Federal Reserve hike

rates (assuming 25-basis point increases) in …?

2019 hikes 2020 hikes 2019 cuts 2020 cuts

3.00

2.50 2.63
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

2020 Hikes 0.76

0.69

0.71
0.50 2020 Cuts

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

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4. Please rate the performance of Jerome Powell in the

following areas? (1=Very weak, 2=Weak, 3=Neutral, 4=Strong,
5=Very strong)

Note: In the January 30, 2018 survey we asked for the expected performance
of Powell as Fed chairman. He was sworn in as chairman on February 5, 2018
Jan 30 2018 Jan 29 2019

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

3.68
Leadership
3.36

3.78
Transparency
3.59

3.70
Communication
2.67

Economic 2.95
forecasting 2.76

Economic 2.76
expertise 3.09

Regulatory 4.05
expertise 3.47

Market 3.81
knowledge 3.40

Overall 3.51
monetary policy 3.18

Average for 3.53

all categories 3.19

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5. What grade would you give Jerome Powell as Fed chair?

Powell Yellen's Dec 2017 Grade

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

7%
A (4)
40%

53%
B (3)
43%
Powell's
Grade
27% Average:
C (2) B-/C+
13%
(2.50)

4% Yellen's
D (1) December
5% 2017 Grade
Average:
B+
7% (3.18)
F (0)
0%

Don't 2%
know/
unsure 0%

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6. The Fed plans to reduce its balance sheet by $600 billion

over the next year. That pace is:

Dec 18 Jan 29

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

21%
Too fast
44%

57%
Just right
53%

14%
Too slow
0%

Don't know/
7%
unsure
2%

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7. If the Fed reduces its balance sheet by $600 billion this

year, it would be roughly equivalent to hiking the Federal
Funds Rate by:
Nov 7 Jan 29

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

0 bps
7%

5 bps
2%

10 bps
4%

Jan 29
4%
15 bps
2% Average:
41.6 bps
25 bps
32%
25%
Nov 7
35 bps Average:
2%
35.2 bps

50 bps
21%
32%

75 bps
11%
9%

Don't know/ 21%

unsure 27%

CNBC Fed Survey – January 29, 2019

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8. When it comes to cutting its balance sheet this year, the

Fed will:

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

Reduce the
pace of its 42%
decline

Stick to its
current plan 56%

Speed up
the pace of 0%
its decline

Don't know/
unsure 2%

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

At what level do you expect the Fed to stop reducing its
balance sheet?

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

Less than $850B

$850B
$875B
$900B
$925B
Average:
$950B
$2.83
$975B trillion
$1.00T
$1.25T Average
$1.50T 4% for when
$1.75T 2% the Fed
$2.00T 13%
will stop:
$2.25T
2021 Q1
$2.50T 13%
$2.75T 7%
$3.00T 20%
$3.25T 24%
$3.50T 13%
$3.75T 4%
$4.00T
Don't know/unsure

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11. Should the Fed change its policy of reducing the

balance sheet by "auto pilot" and instead make its levels
and amounts sensitive to the economic outlook?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Yes 53%

No 42%

Don't
know/ 4%
unsure

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12. When it comes to short-term changes in the bond

and stock markets, Fed policy is giving those changes:
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Too much
consideration 27%

Appropriate
consideration 53%

Not enough
consideration 18%

Don't know/
unsure 2%

CNBC Fed Survey – January 29, 2019

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13. Do you generally approve or disapprove of the job

President Trump is doing handling the economy?

Strongly Approve Neutral Disapprove Strongly

approve disapprove
70%

Approve + Strongly Approve 43% Disapprove + Strongly Disapprove 32%

60%
Approve 34%

52%

50% 49%

45% 45%
44%
40%
41% 38%

Neutral 25% 34%

30%
Strongly
24% Disapprove 25%
18%

20%20%
19% 18% 21%
17%
18% 18%
17%
16% 15% 14% 14%
14% 11% 14%
13%
10% 12%
9%
8% 11% 9% 7%
5% Strongly
Disapprove
Approve
14%
9%
0%
Mar 20 May 1 Jun 12 Jul 31 Sep 25 Nov 7 Dec 18 Jan 29

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14. Regarding trade negotiations between China and the

U.S., which of the following is most likely by March 1,
2019?

Dec 12 Jan 29
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

New U.S. 2%
tariffs imposed
on China 2%

A trade agreement 31%

between China
and the U.S. 18%

An agreement
to continue 67%
talks without
a new agreement
80%

0%
Don't know/unsure
0%

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15. How have your 2018 and 2019 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

date

2019 -0.11 -0.11 -0.20 -0.16

GDP: percentage percentage percentage percentage
points points points points

2020 -0.10
GDP: percentage
points

2019 +0.11 +0.15 +0.07 +0.07

Headline percentage percentage percentage percentage
inflation points points points points
(CPI):

2020 +0.05
Headline percentage
inflation points
(CPI):

CNBC Fed Survey – January 29, 2019

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January 29, 2019

16. How have your forecasts for GDP been affected by

the government shutdown? (Expressed as incremental
change of forecast in percentage points)

Average responses:

2019 -0.14
GDP: percentage
points

2020 -0.01
GDP: percentage
points

2019 Q1 -0.40
GDP: percentage
points

2019 Q2 +0.13
GDP: percentage
points

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

December 31, 2019 December 31, 2020

3,200

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

2,800 2862

2774
2750

2,600

2,400

2,200

2,000

1,800

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

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21. What percentage of the recent market volatility

would you ascribe to each of the following factors? (Total
percentage for responses must be 100%)

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

Global
economic 21%
weakness

Fed rate
hike policy 23%

Fed balance
sheet policy 10%

Tariff
concerns 22%

Worries
about U.S.
economic 16%
growth

Don't know/
unsure 6%

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22. 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%

3.16%
3.0%
3.03%

2.5%

2.0%

1.5%

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

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23. 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% 2.98%

2.87% 2.99%
2.90%
2.93%
2.9% 2.86% 2.95%

2.92%
2.87%
2.85% 2.66%
2.8%
2.73% 2.80%
2.74%
2.70% 2.70%
2.68%
2.7% 2.67% 2.69%
2.67% 2.67%

2.60% 2.65%
2.6%

2.56%
2.54%
2.5%
2.49%
2.49%

2.4%
2.42%

2.3%

2.2% 2.22%

2.1%
Jan Jan Jan
Nov Dec Mar May Jun Jul Sep Oct Dec Mar May Jun Jul Sep Nov Dec
31 30 29
1 13 14 2 13 25 19 31 12 20 1 12 31 25 7 18
'17 '18 '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
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
Dec 31, 2021 2.67 2.49

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January 29, 2019

24. 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%
2.92% 2.98%
2.85% 2.94%
2.91%
2.85% 2.73%
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%
Sep 16

Jul 28

Jul 26

Sep 20

Jul 25
Sep 19

Jul 31
Sep 25
Apr 28

Apr 26
Sept 16

May 2

May 1
Aug 20

Dec 16

Mar 17

Dec 13

Mar 14

Dec 12

Mar 20

Dec 18
Jan 27, '15

Aug 25

Dec 15

Mar 15

Aug 24
Jun 16

Jun 14

Jun 13

Jun 12
Jan 26 '16

Jan 29
Nov 1

Jan 31 '17

Jan 30 '18

Nov 7
Oct 28

Oct 27

Oct 31

Survey Dates

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January 29, 2019

25. 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
Jan 27, 2015 Q1
Mar 17 Q4
Apr 28 Q1
June 16 Q1
July 28 Q2
Aug 25 Q3
Sept 16 Q1
Oct 27 Q3
Dec 15 Q1
Jan 26, 2016 Q2
Mar 15 Q3
Apr 26 Q4
Jun 14 Q4
Jul 26 Q4
Aug 24 Q4
Sept 20 Q4
Nov 1 Q1
Dec 13 Q2
Jan 31, 2017 Q2
Mar 14 Q2
May 2 Q2
June 13 Q2
Jul 25 Q2
Sep 19 Q2
Oct 31 Q3
Dec 12 Q3
Jan 30, 2018 Q3
Mar 20 Q3
May 1 Q3
Jun 12 Q4
Jul 31 Q4
Sep 25 Q4
Nov 7 Q4
Dec 18 Q1
Jan 29, 2019 Q1

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January 29, 2019

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

change in real U.S. GDP for … ?
2019 2020
2.5%

2.44%

2.4%

2.33%

2.3%

2.2%

2.1%
2.05%

2.0%

1.9%

1.81%
1.8%
Dec 18 Jan 29 '19
Survey Dates

CNBC Fed Survey – January 29, 2019

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January 29, 2019

27. 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%

2.06% 2.07%

2.0%

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

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28. 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%

2.05%
2.0%

1.9%

1.8%

1.7%

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

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

be for:

2019 2020

4.00%

3.96%
3.93%

3.79%
3.80% 3.77%

3.67%
3.66%
3.60% 3.64%
3.61%

3.40%

3.20%

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

CNBC Fed Survey – January 29, 2019

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January 29, 2019

30. 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

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Page 27 of 39
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January 29, 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 – January 29, 2019

Page 28 of 39
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January 29, 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 – January 29, 2019

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 FED SURVEY
January 29, 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 2
Sep 25 2 2 2 9 0 0 2 2 7 4 0 2 0 6 4 0 4 2 9 2
1 1 1 3
Nov 7 0 0 3 7 0 0 0 0 3 7 3 0 0 4 3 0 0 7 1 0
1 1 3 1
Dec 18 0 2 2 0 0 0 0 0 7 7 0 0 0 1 2 0 0 9 7 2
Jan 29
‘19 2 2 1 1
0 0 2 0 0 0 2 2 7 0 0 0 0 9 2 0 4 6 6 0

Other responses:
 Democrats' unwavering hatred of Donald Trump and opposition to all
things Trump
 Fear, uncertainty, and doubt sown by media
 In 2019, we see domestic and political issues threatening recovery—i.e.,
shutdown and trade policies. In 2020, it's likely to be Fed tightening.
 Lack of confidence in policymakers
 Collapse in oil prices
 Productivity growth

CNBC Fed Survey – January 29, 2019

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31. 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:
26.1%
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%
23.5%
23.2%
22.9%24.1%
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%
Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18
Oct-11

Oct-12

Oct-13

Oct-14

Oct-15

Oct-16

Oct-17

Oct-18
Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18
Apr-12

Apr-13

Apr-14

Apr-15

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CNBC Fed Survey – January 29, 2019

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 FED SURVEY
January 29, 2019

32. What is your primary area of interest?

Currencies Other
0% 16%

Fixed
Income
11%

Economics
56%
Equities
18%

Comments:

John Augustine, Chief Investment Officer, Huntington Bank:

Q4-2018 was about markets losing confidence in pretty much all
global policymakers - elected or appointed. 2019 will be about
whether can regain any confidence in global policymakers.

Jim Bianco, President, Bianco Research: The Fed needs to have

a discussion of what $600 billion in balance sheet reduction means in
rate hike terms. It seems the market thinks it's two to three hikes
while the Fed thinks it is less than one.

Peter Boockvar, Chief Investment Officer, Bleakley Advisory

Group: The Fed is not data dependent, it is S&P 500 dependent.

CNBC Fed Survey – January 29, 2019

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January 29, 2019

Kathy Bostjancic, Head of U.S. Macro Investor Services,

Oxford Economics USA: The FOMC policy statement will shift to a
dovish tone that aligns with recent Fed speak. It will signal a pause
in rate hikes by removing the reference to "some further gradual"
rate increases and modifying or removing the balance of risks
assessment.

Robert Brusca, Chief Economist, Fact and Opinion Economics:

Economic trends are fading. And frankly, economists do not have a
clue. Between globalism and technology, decent jobs are
disappearing like water down a drain. The pressure of economic
strain has split people ideologically. Some want to make
government responsible for their welfare. But government is already
straining to provide on past 'entitlement' promises as fiscal deficits
rise sharply and the Social Security 'fund' empties. In my view, open
trade with bad rules has created income concentration by destroying
the middle class. We are left with the worst political environment we
have seen perhaps since the Civil War. And politics is the minefield
you have to walk through to get to economic policy change. These
are sobering thoughts. There is no warm and fuzzy future out there
waiting for you … or me. There is no political candidate who can
deliver the good life. It no longer is there. It's time for clear thinking
and hard work. Instead, people want economic justice delivered
through political means and that just is not going to happen without
a lot of time and hard work that no one seems willing to put in. But
as long as people think that the economic solution is in the voting
booth, the country will remain at risk to doing something really
stupid. The consideration of imposing a wealth tax is already taking a
walk in that direction. It's social warfare with economics caught in
the cross fire.

CNBC Fed Survey – January 29, 2019

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January 29, 2019

Thomas Costerg, Senior US Economist, Pictet Wealth

Management: Despite the shutdown, U.S. macro fundamentals are
actually quite healthy. Business investment remains resilient, so
does the U.S. consumer. Recession risks are perhaps overplayed by
some in the market. There is perhaps equally too much fear about
the non-U.S. growth outlook.

Bill Dunkelberg, Chief Economist, National Federation of

Independent Business: Worker shortage will be the largest
challenge to real GDP growth.

Neil Dutta, Head of Economic Research, Renaissance Macro

Research: While economic data releases have been hard to come
by, one thing is clear: U.S. growth remains solid when compared to
the rest of the world. In January, we've seen beats on some regional
PMIs (and Markit), low jobless claims, and a pickup in mortgage
purchase applications. By contrast, Europe is barely growing while
China continues to slow despite looser policy. The shutdown hurts,
but let’s not get carried away.

Mike Englund, Chief Economist, Action Economics, LLC: The

Fed should focus on its dual mandate and not stock prices. How
Chair Powell handles the market correction will send an important
signal, though interpretation will be clouded by the coinciding
government shutdown that provides a legitimate source of
uncertainty.

CNBC Fed Survey – January 29, 2019

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January 29, 2019

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

Fed raised the federal funds rate above the neutral (natural) rate in
December. That is evident in the declining inflation rate and the
flattening of the yield curve. But the neutral rate is not constant. If
a trade deal is reached and oil prices stabilize at an appropriate
level, business investment will pick up. Stronger business
investment and the resulting acceleration in productivity growth will
raise the neutral federal funds rate. When that happens, the Fed will
have to resume its rate hikes.

Kevin Giddis, Head of Fixed Income Capital Markets, Raymond

James Financial: When you look at the slide in global growth, it is
hard to think that, in a matter of time, the U.S. won't join the slide.
This prospect has only been enhanced by a lack of a trade deal, the
government shutdown, and a completely inefficient cooperation in
Washington. Throw in a lack of inflation, and it leaves the Fed with
very few options other than to sit and watch the party slowly end.

Art Hogan, Chief Market Strategist, National Holdings

Corporation: Getting a trade deal done with China in the first half
of 2019 will make most of the other macro concerns less ominous.
Right now, trade policy usurps monetary policy by a light year.

John Kattar, Chief Investment Officer, Ardent Asset

Management: Powell has taken some criticism for seeming to play
things by ear and bending to the markets. That's unfair. We have
never been through a QT process before, and nobody knows how it
will play out. The Fed's strategy of being reactive to both economic
and market data is correct because the risks are so high.

CNBC Fed Survey – January 29, 2019

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January 29, 2019

Barry C. Knapp, Managing Partner, Ironsides

Macroeconomics: While I selected global economic weakness as
the biggest risk facing the U.S. economy, for 2019 the risk isn't
particularly acute. The most probable cause of the next recession is
tax policy following the 2020 presidential election. At that point,
mandatory spending-related debt will be driving the aggregate debt
levels higher, similar to the early '90s and early '10s. With debt and
deficits rising there will likely be a grand bargain, regardless of which
party holds the presidency and Congress, that will be primarily
dependent on tax hikes rather than spending cuts. Like the euro
sovereign debt crisis 'austerity' from Spain, France, and Italy, the
spending multipliers will be larger than expected despite significantly
reduced household leverage.

David Kotok, Chairman and Chief Investment Officer,

Cumberland Advisors: All forecasts are now high risk. Shutdown
and trade war elements have made high quality forecasting
impossible.

Subodh Kumar, President, Subodh Kumar & Associates: Our

take from the parable of Humpty Dumpty is that breaking something
is a lot easier than was putting it together, let alone patching it up
after breakage. Students of the political economy need to recognize
this. Further, students of the capital markets need to move beyond
rationalizing every momentum move. We look askance at some
considerations placing Q4/2018 as being the equivalent of a bear
market cycle. Instead, investors should contemplate the risks of
excess leverage and whether excessive quantitative ease has so
distorted capital market valuation as to impair its role of efficiently
allocating capital. We expect focus to expand on the quality of
delivery being incorporated in reported results for countries and
companies alike.

CNBC Fed Survey – January 29, 2019

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January 29, 2019

Guy LeBas, Chief Fixed Income Strategist, Janney

Montgomery Scott: The issue with the Fed's balance sheet isn't so
much economic growth as scarcity of banking system reserves. If
the Fed continues to shrink at the current pace (which will be $400B
in 2019), reserve scarcity will do strange and unpredictable things to
short-term interest rates and bank funding costs.

Donald Luskin, Chief Investment Officer, Trend Macrolytics:

Jerome Powell is the worst Fed chair since G. William Miller. I predict
he will be gone by year-end. We need a new ambassador to Ukraine
anyway.

Rob Morgan, Chief Investment Officer, Sethi: The Fed will be

watching in 2019 to see if slowing growth in Asia and Europe drags
down the U.S. economy as well. If that happens, the two hikes
projected for 2019 and one in 2020 may be eliminated.

Joel L. Naroff, President, Naroff Economic Advisors: The

political concerns are outweighing the economic ones and once the
chaos in Washington is cleared, the markets should rebound and
interest rates rise sharply to reflect the true underlying strength of
the economy.

Lynn Reaser, Chief Economist, Point Loma Nazarene

University: The Fed will be trying to decide policy ahead of two
major events during the next month: the outcome of China/U.S.
trade talks and negotiations over border security. Higher stock
prices, lower bond yields, and a weaker dollar all mean that markets
have already done some of the Fed's easing for it. The Fed is now
likely to indicate that it will be patient and hope that everyone else
will be too.

Chris Rupkey, Chief Financial Economist, MUFG: The Federal

government is open again temporarily and this means the economy
is out of the woods for now...

CNBC Fed Survey – January 29, 2019

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January 29, 2019

John Ryding, Chief Economist, RDQ Economics: A considerable

part of the recent equity and bond market moves have been tied to
oil, which is a sign of increasing supply (positive supply shock).
Market signals have painted too bleak a picture for the economic
outlook.

Richard I Sichel, Senior Investment Strategist, The

Philadelphia Trust Company: The extreme selloff that culminated
on Christmas Eve was based on everything going wrong. Most issues
have been resolved, at least to some extent, led by a huge turnabout
by the Fed. A trade deal will be forthcoming, government workers
will be working, and our economy will be allowed to continue growing
at a strong sustainable rate. We can always hope for another 2017
(excellent returns and minimal volatility). Aside from hope,
fundamentals are strong and quality stocks that are reasonably
valued should end the year higher.

Allen Sinai, Chief Global Economist and Strategist, Decision

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

Hank Smith, Co-Chief Investment Officer, Haverford Trust

Company: If Trump want to become a two-term president, he
needs to come to a trade agreement with China and reduce or
eliminate tariffs.

Peter Tanous, Chairman, Lynx Investment Advisory: The

economic slowdown has begun.

CNBC Fed Survey – January 29, 2019

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January 29, 2019

Mark Vitner, Managing Director & Senior Economist, Wells

Fargo Securities: The Fed has rarely raised the federal funds rate
when the ISM index is declining sharply and has typically halted
tightening cycles once the index fell below the key 50 break-even
level. Another big drop in the ISM would likely cause the Fed to take
a longer pause, and if the index falls definitively below 50, they will
likely remain on hold until the factory sector rebounds in a
meaningful and sustainable way.

Scott Wren, Senior Global Equity Strategist, Wells Fargo

Investment Institute: While overall risks have increased, we
continue to lean toward further expansion and a modestly higher
stock market by the end of the year. Not the time to hide.

Mark Zandi, Chief Economist, Moody's Analytics: Rarely has

political dysfunction been such a mortal threat to the economy. The
government shutdown, Trump's trade war, and Brexit must be
resolved soon or the economic expansion will be at risk.

CNBC Fed Survey – January 29, 2019

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