FED SURVEY

September 19, 2017

These survey results represent the opinions of 42 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 14-16, 2017. 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 September 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
unchanged 100%

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%
98% 98% 98%
95% 95%
90% 94%
92%
90% Raise interest rates: 98%
88%
80%

70%

60%

50%

40%

30%

20% Lower interest rates: 2%

10%10% Launch new quantitative easing: 0%

10%
4% 5% 5%
3% 2% 2% 2%
0% 0% 0% 0% 0% 0% 0%
0%
Jan 27 Mar Apr 26 Jun 14 Jul 26 Aug Sep 20 Nov 1 Dec 13Jan 31 Mar May 2 Jun 13 Jul 25 Sep 19
15 24 14
Note:

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(For the 98% answering the next move will be to raise rates)

When will the Federal Reserve take this action?

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

Oct 0%

Nov 2%

Dec 76%

Jan '18 2%
Average:

Feb 0% January
2018

Mar 17%

Apr 0%

May 0%

Jun 0%

Jul 0%

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

rates in ?

2017 hikes 2018 hikes

5.00

4.50

4.00

3.50
3.16
2.98 3.03
3.00
2.78 2.85
2.66
2.50
Average

2.50

1.97
2.00 2008 average: 2.63

1.50

1.00

0.50

0.00
Nov 1 Dec 13 Jan 31 Mar 14 May 2 Jun 13 Jul 25 Sep 19
Survey Dates

Note: For 2018, 2% of respondents said the Fed would cut rates

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4. In general, do you approve or disapprove of the job

Donald Trump is doing as president?

Jun 13 Jul 25 Sep 19

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

27%

Approve 29%

39%

49%

Disapprove 51%

49%

24%
Don't know/
unsure 20%

12%

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Do you generally approve or disapprove of the job Donald

Trump is doing handling the economy?

Jun 13 Jul 25 Sep 19

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

50%

Approve 43%

63%

26%

Disapprove 36%

29%

24%
Don't
know/ 21%
unsure
7%

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5. When do you expect, if at all, the following policies will

be enacted by Congress and signed into law by President
Trump?

Avg. forecast
Mar 14 May 2 June 13 July 25 Sept 19

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018

Health care reform (4% said (12% said (13% said (31% said (39% said
never) never) never) never) never)

Q1 2018 Q2 2018 Q1 2018 Q3 2018 Q3 2018

Dodd-Frank reform (11% said (19% said (22% said (25% said (34% said
never) never) never) never) never)

Q4 2017 Q4 2017 Q1 2018 Q1 2018 Q1 2018

(0% said (0% said (5% said (5% said (2% said
Tax cuts
never) never) never) never) never)

Q1 2018 Q1 2018 Q1 2018 Q2 2018 Q2 2018

Infrastructure
(13% said (14% said (16% said (21% said (10% said
spending hike
never) never) never) never) never)

GSE Q3 2018 Q3 2018 Q4 2018 Q4 2018 Q1 2019

(Fannie and Freddie (33% said (34% said (46% said (41% said (41% said
reform) never) never) never) never) never)

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6. The stock market's expectations for Trump

administration policy changes are:
Too Realistic Too Don't
optimistic pessimistic know/
unsure
100%

90%

80%

70%
64%
62% Too optimistic
60% 56%
56%

50%
50%
44%
47%
40% Realistic
42% 41%
39% 39%
36%
30%
32% 31%

20%
Don't know/unsure

11% 10%
Too pessimstic
10%
5% 5% 7%
2% 3% 2% 3%

0%
Dec 13 Jan 31 Mar 14 May 2 Jun 13 Jul 25 Sep 19

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7. Relative to your expectations a month or so ago for tax

cuts, are you now...?

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

More optimistic 34%

Less optimistic 17%

About the same 49%

Don't
know/ 0%
unsure

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8. When do you forecast the European Central Bank will

announce plans to reduce quantitative easing?

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

Oct 27%

Nov 12% Average:

Dec 24% December

2017
Jan
2018 10%

Feb 0%

Mar 2%

Apr 0%

May 2%

Jun 7%

Jul 0%

Aug 0%

After
Aug '18 2%

Don't
know 12%

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9. Under the ECB's current quantitative easing program, it

purchases 60 billion euros of assets monthly. By the END
of 2018, what do you expect monthly purchases to be?

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

0 15%

5 0%
Average:
10 3%
27
15 5% billion
euros
20 15%

25 8%
Billions of euros

30 18%

35 0%

40 28%

45 3%

50 8%

55 0%

60 0%
More
than 60
0%

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10. How low do you believe the unemployment rate can

fall without sparking a worrying increase in the inflation
rate over the medium term?

Average for the 55% who provided a numerical

response: 3.66%

45% said there is little or no connection between

unemployment and inflation

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

December 31, 2017 December 31, 2018

2,700

2588 2593
2,600
2564

2555
2562 2515

2,500

2453 2493
2480
2427
2442
2,400
2409
2357
2354
2,300 2275
2244
2223
2249 2255
2234 2242
2,200
2200

2158
2,100
2107

2,000

1,900

1,800
Dec Jan Jan Mar Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep
15 15 26 15 26 14 26 24 20 1 13 31 14 2 13 25 19
2016 2017
Survey Dates

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12. What do you expect the yield on the 10-year

Treasury note will be on ?

December 31, 2017 December 31, 2018

4.0%

3.44% 3.43%
3.5%
3.37%

3.22%

3.09%
3.05%
2.96%
3.0% 2.88%
3.03%
2.90%
2.95%
2.88%
2.83%
2.54% 2.74%
2.5% 2.61%
2.58% 2.59%
2.26%2.28%
2.42%

2.24% 2.25%

2.0%

1.5%

1.0%
Dec Jan Mar Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep
15 26 15 26 14 26 24 20 1 13 31 14 2 13 25 19
2016 2017
Survey Dates

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13. Where do you expect the fed funds target rate will
be on ?
Dec 31, 2017 Dec 31, 2018 Dec 31, 2019

3.0%

2.73%
2.70% 2.68%
2.67%
2.56%
2.49%
2.5%

2.25% 2.42%
2.17% 2.19%
2.22% 2.15%
2.07% 2.10% 2.06%
2.03%

2.0%
1.87%
2.02%
1.81%

1.62%
1.61%
1.61% 1.60% 1.78%
1.69%
1.49%
1.5% 1.43% 1.42%
1.39%
1.32%
1.43% 1.26%
1.22% 1.37% 1.35%

1.18% 1.16%
1.0% 1.09%

0.5%

0.0%
Dec Jan Jan Mar Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep
15 15 26 15 26 14 26 24 20 1 13 31 14 2 13 25 19
2016 2017

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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?
4.0%

3.5%

3.30%
3.20%
3.17%
3.11%
3.06%
3.16%
2.98% 2.95%
3.0% 3.04% 2.94%
2.92% 2.85%
2.91%
2.85%2.79% 2.73% 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
Oct 28

Sept 16
Oct 27

Jan 26 '16

Sep 20

Sep 19
Jan 27, '15
Mar 17

Jun 16

Mar 15

Jun 14

Jan 31 '17
Jul 28

Jul 26

Mar 14

Jun 13
Aug 20

Jul 25
Apr 28

Aug 25

Apr 26

Aug 24
Dec 16

Dec 15

Dec 13
Nov 1

May 2

Survey Dates

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15. When do you believe fed funds will reach its

terminal rate?

2017 2018 2019

Survey date
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

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16. What is your forecast for the year-over-year

percentage change in real U.S. GDP for ?
2017 2018

3.0%

17. If at all, how have

Hurricanes Harvey and Irma
changed your GDP forecasts,
2.8% in percentage points, for? +2.76%
+2.75%

2017 average: -0.06

2018 average: +0.13
+2.62%
2.60%
2.6% +2.57%

+2.58%

+2.43% +2.51%
+2.41% +2.45%
2.4% 2.45%
+2.38%

+2.28%
+2.26% +2.25%
+2.31%

2.2% +2.25% +2.24% 2.25%

+2.24%
+2.21% 2.21%
+2.16%

2.0%

1.8%
Dec Jan 26 Mar Apr Jun Aug Sep Dec Mar Jun Sep
Jul 26 Nov 1 Jan 31 May 2 Jul 25
15 '16 15 26 14 24 20 13 14 13 19
2017 +2.43 +2.31 +2.41 +2.21 +2.25 +2.26 +2.24 +2.28 +2.16 +2.57 +2.51 +2.38 +2.24 +2.25 2.25% 2.21%
2018 +2.76 +2.75 +2.62 +2.58 +2.45 2.45% 2.60%

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18. What is your forecast for the year-over-year

percentage change in the headline U.S. CPI for ?
2017 2018

2.8%

2.64%

2.6% 2.57%

2.50%

2.44%
2.38%
2.4%
2.36% 2.37%
2.24% 2.28%
2.20% 2.23%
2.2% 2.16% 2.15%
2.12%

2.13% 2.14%
2.12% 2.12%
2.09%
2.07%
2.0%
2.02% 1.92%

1.88%
1.8%

1.6%

Survey Dates

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19. When do you expect the Fed to allow its balance

sheet to decline?
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Sep 28%

Oct 40%

Nov 8%

Dec 8%

Jan '18 13%

Feb 0%

Mar 0%

Apr 0%

May 0%

Jun 0% Average:
October '17
Jul 0%

Aug 0% July 25 Survey:

September '17
Sep 0%

Oct 0% June 13 Survey:

November '17
Nov 0%

Dec 0%

Jan '19 0%

Feb 0%

Mar 0%

Apr 0%

May 0%

Jun '19 or later 3%

Never 3%

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20. On a scale of -5 (extremely negative) to +5

(extremely positive), what effect will reducing the
balance sheet have on economic growth, stocks, and
bonds?

Jul 25 Sep 19
Extremely negative Neutral Extremely positive
-5.0 -4.0 -3.0 -2.0 -1.0 +0.0 +1.0 +2.0 +3.0 +4.0 +5.0

-0.25
Economic growth
-0.21

-0.80
Stocks
-0.83

-1.15
Bonds
+0.33

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21. Do you believe the Federal Reserve should reduce

the balance sheet?

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

Yes 83%

No 7%

Don't know/
unsure 10%

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22. What target size for its balance do you believe the
Federal Reserve will adopt?
Trillions of dollars
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Jun
13 2.4
Survey dates

Jul
25 2.5

Sep
19 2.4

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23. Roughly how many years will the Fed take to reach
this goal?
Years
0 1 2 3 4 5 6 7 8 9 10

Jun
13 4.6
Survey dates

Jul
25 4.6

Sep
19 4.4

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24. Will Mr. Trump reappoint Fed Chair Janet Yellen?

Dec 13 Jan 31 Jun 13 Jul 25 Sep 19

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

11%
5%
Yes 11%
10%
38%

82%
74%
No 68%
75%
53%

7%
21%
Don't
know/ 21%
unsure
15%
10%

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18. Should President Trump reappoint Fed Chair Janet

Yellen?

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

Yes 59%

No 29%

Don't
know/ 12%
unsure

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18. If Ms. Yellen is not reappointed, who will Mr. Trump

nominate to replace her:

John Taylor Gary Cohn Kevin Warsh Don't know

60%

50%
50%

40% Kevin Warsh

38% Gary Cohn
33%
34%
John Taylor
30%

24% 24%

22% 19%
20% 20% 20%

14% 17%
13%
10% 10%
9%
Don't know

0% 3%
Dec 13 Jan 31 Jun 13 Jul 25 Sep 19
Survey Dates

Note: Only responses that received 10% or more on any survey date are shown.

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19. Should the next Fed chair be an economist?

Jul 25 Sep 19
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

38%
Yes
53%

35%
No
15%

Don't 28%
know/
unsure
33%

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20. Relative to Yellen, do you expect the next Fed chair

(assuming it is not Yellen) to be someone who favors?

Jul 25 Sep 19

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

Tighter 35%
monetary
policy 39%

Looser 10%
monetary
policy 7%

Roughly
unchanged 48%
monetary
policy 49%

Don't 8%
know/
unsure 5%

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21. 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

Tax/regulatory policies

Trump's temperament
Global econ weakness
Rise in interest rates

Don't know/unsure
European elections
Immigration policy

Fed policy mistake

Slow wage growth
Geopolitical risks
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
Jan 27 1 1 4 1
'15 0 3 9 0 0 0 6 6 1 6 6 0

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Outcome of US presidential election

European recession/financial crisis

Terrorist attacks in the U.S.

Protectionist trade policies

Tax/regulatory policies

Trump's temperament
Global econ weakness
Rise in interest rates

Don't know/unsure
European elections
Immigration policy

Fed policy mistake

Slow wage growth
Geopolitical risks
Slow job growth

Debt ceiling
Deflation
Inflation

Deficits

Other
Survey Date
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
2 3
Nov 1 3 7 8 0 3 0 8 3 2 3 0 0 5 8 0

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Outcome of US presidential election

European recession/financial crisis

Terrorist attacks in the U.S.

Protectionist trade policies

Tax/regulatory policies

Trump's temperament
Global econ weakness
Rise in interest rates

Don't know/unsure
European elections
Immigration policy

Fed policy mistake

Slow wage growth
Geopolitical risks
Slow job growth

Debt ceiling
Deflation
Inflation

Deficits

Other
Survey Date
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 0 8 3 0
1 1 2 1
Jul 25 0 5 5 3 3 0 0 0 3 8 5 0 0 0 5 0 8 8 0
1 1 3
Sep 19 0 2 2 0 2 0 5 2 7 0 7 2 0 2 2 0 7 7 0

Other responses:

Picking some hawkish idiot for Fed chair

Unsustainable debt and liability growth
Investor expectations regarding future US monetary policy

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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)
40%

36.1%

This survey:
35%
34.0% 18.8%

30%
28.5% 28.8%

26.0%
25.9%
25.3%
25.5%
25% 24.4%
23.5%
22.9% 24.1%
23.2%
22.1%
22.2%
20.6% 21.6%
20.4% 21.1%
20% 20.3% 18.9%
19.3%

18.2% 18.4% 18.5%

19.1% 17.3% 18.6% 18.1% 18.8%
16.9% 16.9%
17.6% 16.2% 16.4% 17.4%
16.4%
15.1%
16.2%
15% 15.1%
15.3% 15.0%
15.2% 15.2%
14.6% 14.7%
13.6%
13.0%

10%
Jan 27 '15
Mar 17

Jun 16
Jul 28

Jan 15 '16

Mar 15

Jun 14

Jan 31 '17
Mar 14
Aug 11, '11

Mar 16

Mar 19

Jun 18

Jan 28 '14
Mar 18

Jul 26

Jun 13
Sep 19

Jul 31

Jul 30

Jul 29
Sep 16

Dec 16

Dec 15

Sep 20

Jul 25
Dec 13
Jan 23, '12

Sep 12
Dec 11
Jan 29, '13

Dec 17

April 28

Sept 16

Aug 24

May 2

Sep 192
Oct 31

Sep 6
Oct 29

Oct 28

Oct 27

Nov 1
Apr 24

Apr 30

Apr 28

Jan 26

Apr 26

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23. What is your primary area of interest?

Other
17%
Currencies
2%

Fixed Income
12% Economics
54%
Equities
15%

Comments:

Marshall Acuff, Managing Director, Silvercrest Asset

Management: Profits growth and TINA remain the key drivers of
stock prices.

Jim Bianco, President, Bianco Research: Balance sheet reduction

matters after it has declined hundreds of billions of dollars. That
means the 2H of 2018.

Peter Boockvar, Chief Market Analyst, The Lindsey Group: If

QE ignited asset price excitement, shouldn't QT do the opposite? QE
certainly did nothing for economic growth, so I won't bother raising
the question of what QT will mean for it.

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Robert Brusca, Chief Economist, Fact and Opinion Economics:

The Fed is really lost and needs a new set of objectives to guide
policy. As it stands, the Fed really seems to be making it up as it
goes along.

John Donaldson, Director of Fixed Income, Haverford Trust

Co.: The demand for fixed-income assets is so far out of balance
with the available supply that the Fed's unwinding of its balance
sheet should be welcomed, not feared.

Bill Dunkelberg, Chief Economist, National Federation of

Independent Business: Housing construction is constrained by a
lack of qualified labor. Rebuilding from Harvey and Irma will be a
challenge because of it.

Neil Dutta, Head of Economic Research, Renaissance Macro

Research: Financial conditions remain fairly easy despite the fallout
from Hurricanes Harvey and Irma. Meanwhile, business and
consumer sentiment has been solid through September. The odds of
a hike a hike in December are better than even.

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

I haven't removed a December rate hike from my forecast yet, I
think the odds have fallen to around 50/50. The Fed could very
easily use "facilitating the recovery from Hurricanes Harvey and
Irma" as an excuse to delay the next rate hike until March.

I think they'll still start shrinking their balance sheet this month, but
will go extremely slowly to avoid a significant rise in long-term bond
yields while people are rebuilding their homes. This is good politics,
not necessarily good policy.

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Stuart Hoffman, Senior Economic Advisor, PNC Financial:

Current economic expansion will break the old length record of 10
years (the 1990s), meaning at least another 2 years of moderate
growth. What it lacks in strength will be made up for in length.

Art Hogan, Chief Market Strategist, Wunderlich Securities:

There seems to be a move towards the center: White House,
Congress, FOMC, ECB. Maybe we can actually get something done
over the next 12 months.

John Kattar, Chief Investment Officer, Ardent Asset

Management: Growth is slowing and inflation remains well below
Fed targets, so there seems little reason for tightening anytime soon.
But the Fed would like to slowly continue to normalize. I'm looking
for 25 bps. in December with perhaps 50 bps. more next year. My
surprise prediction for 2018: Yellen will be reappointed.

Jack Kleinhenz, Chief Economist, National Retail Federation:

Policy changes will be front and center over the next few months. I
believe the FOMC will need to adjust their expectations of inflation
and rate increases to a slower pace. Congress has begun its fiscal
policy and tax changes journey but theres no certainty where the
destination will be. Nonetheless, I expect sustained growth in the
economy, driven by household spending.

David Kotok, Chairman and Chief Investment Officer,

Cumberland Advisors: Washingtons chaos is the most critical item
to resolve. Sadly it is not likely to happen.

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Subodh Kumar, President, Subodh Kumar & Associates: Equity

markets move ever higher. Fixed income markets incorporate low
yields. Complacency appears intact. It seems appropriate to remove
the seventh veil in policy secrecy. Politics globally, as well as internal
to many countries, show tensions. The hurricanes, typhoons and
earthquakes of 2017 demonstrate how suddenly adversity can rise.
The stirrings of volatility amongst major currencies can be seen.
Valuation seems elevated.

Starting with the Federal Reserve, even if slower than we would like
but including the Bank of Canada, the ECB and now the Bank of
England, actual or potential alteration on quantitative ease appears.

We prefer less secretive policy stances as in the late 1970s to mid-

1980s over the chants prevalent since 2009 and even into today of
avoiding surprising markets. The worldwide real business issues run
much deeper than risk on/off. We favor diversification including cash
and precious metals as well as a quality tilt in equities and low
exposure to long-term fixed income.

Guy LeBas, Chief Fixed Income Strategist, Janney

Montgomery Scott: While the recent extreme weather may create
a few quarter-to-quarter gyrations in economic data, it's unlikely to
have a material longer-term impact -- and Fed policymakers have
always been hesitant to respond to the weather, despite market
expectations that they might.

Rob Morgan, Chief Investment Officer, Sethi: The Fed won't

raise rates in September, but will announce more specific plans for
reducing the $4.5 trillion balance sheet.

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Joel Naroff, President, Naroff Economic Advisors: The

hurricanes will mask the underlying trend in the economy but the
Fed members are likely to consider the net impacts to be positive
and move ahead with the rate and balance sheet normalization
process.

Benjamin Pace, Partner and Chief Investment Officer, HPM

Partners LLC: In this intensely competitive global disinflationary
environment, central banks, led by the Fed, must be cautious in
implementation, but resolutely steady in their return to a more
"normal" monetary policy and interest rate level. The economic
recoveries/expansion around the world appear solid, but are
probably still fragile should rates rise too quickly.

Lynn Reaser, Chief Economist, Point Loma Nazarene

University: The Fed is confronting two very different sides of
inflation. Asset prices are rising too rapidly, while prices of goods
and services are climbing too slowly. Monetary policymakers will
need to choose a side and any decision will entail large risks.

John Roberts, Director of Research, Hilliard Lyons: We continue

to worry that the market is more optimistic on what the
administration will accomplish versus what will actually be agreed to.

John Ryding, Chief Economist, RDQ Economics: We have turned

more constructive on the cyclical outlook with the recovery in profits
in the second quarter and the increase in capital spending.
Nonetheless, the economy's potential to grow remains below 2% and
the Fed should continue to normalize policy beginning with the
balance sheet next week and the funds rate in December.

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Richard I Sichel, Senior Investment Strategist, The

Philadelphia Trust Company: The stock market and the economy
need and must have lower taxes and less regulation to sustain the
advances made. Trump must have a legislative accomplishment and
will do his biggest deal ever by including Democrats at the expense
of some supporters. It will help his poll numbers.

Allen Sinai, Chief Global Economist and Strategist, Decision

Economics: The Phillips Curve is dead. Relatively low inflation for a
long, long time because of technology.
Hank Smith, Co-Chief Investment Officer, Haverford Trust
Company: True tax reform by year-end is impossible. At best we
will get some tax cuts. If more GDP growth is the objective, the top
marginal rate and the capital gains rate need to be reduced (along
with corporate taxes). Are they on the table?

Peter Tanous, Chairman, Lynx Investment Advisory: We

inflation hawks have been wrong for years. No inflation. But it might
finally change. $20 trillion debt, very low unemployment, and now
no debt ceiling limit! We will go on a giddy spending spree, then
watch out!

Mark Vitner, Managing Director & Senior Economist, Wells

Fargo Securities: Lots to say here. On the next Fed Chair: Gary
Cohn has gone a long way toward establishing his independence. I
think this makes it more likely that he gets appointed and approved.
In terms of whether the next Fed Chair should be an economist: I
remember a quote from Milton Freidman that essentially stated that
some of the best economists he had ever met were not formally
trained as economists and that some of the worst economists he had
ever met were formally trained as economists. (This is paraphrased.)

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We are less certain about a December rate hike given the

uncertainty surrounding the impact of the Fed's likely efforts to begin
to shrink their balance sheet and the disruptive forces emanating
from Hurricane Harvey and Hurricane Irma. The Fed wants to be
careful when they begin the balance sheet normalization process and
may not want to cloud the process with a December hike. If they do
not raise rates in December, we would expect more tightening in
2018. Our end point is the same regardless.

We put a twenty percent probability on recession in the next 12

months because no one really knows what will happen once the Fed
begins to shrink their balance sheet. If there is one thing I have
learned being an economist, it is that everything that is interesting
happens at the margin.

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