FED SURVEY

January 30, 2018

These survey results represent the opinions of 40 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 25-27, 2018. 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 5%

Lower interest
rates 0%

Keep rates
unchanged 95%

Don't know/
unsure 0%

CNBC Fed Survey – January 30, 2018

Page 1 of 31
 FED SURVEY
January 30, 2018

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% 98% 98% 98%
98%
95% 95%
90% 94%
92%
90% Raise interest rates: 100%
88%
80%

70%

60%

50%

40%

30%

20% Lower interest rates: 0%

10%10% Launch new quantitative easing: 0%

10%
4% 5% 5%
3% 2% 2% 2% 2%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
0%
Jan Mar Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep Oct Dec Jan
27 15 26 14 26 24 20 1 13 31 14 2 13 25 19 31 12 30

CNBC Fed Survey – January 30, 2018

Page 2 of 31
 FED SURVEY
January 30, 2018

(For the 100% 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%

Feb 3%

Mar 90%

Apr 0%

May 3%

Jun 3% Average:

March
Jul 0% 2018

Aug 0%

Sep 0%

Oct 0%

Nov 0%

Dec 0%

After Dec '18 3%

CNBC Fed Survey – January 30, 2018

Page 3 of 31
 FED SURVEY
January 30, 2018

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

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

2018 hikes 2019 hikes

4.00

3.50

3.21
3.00

2.86 2.84
Average

2.50 2.63

2.39
2.26
2.00

1.50

1.00
Sep 19 Oct 31 Dec 12 Jan 30
Survey Dates

CNBC Fed Survey – January 30, 2018

Page 4 of 31
 FED SURVEY
January 30, 2018

4. By how much do you estimate that the recent tax cut bill
signed by President Trump will change the growth rate of
GDP for … ?

Average change in percentage points

-2.00 -1.50 -1.00 -0.50 +0.00 +0.50 +1.00 +1.50 +2.00

2018 +0.63

2019 +0.52

Annual
average
over the +0.44
next 10
years

CNBC Fed Survey – January 30, 2018

Page 5 of 31
 FED SURVEY
January 30, 2018

5. Who benefits most from corporate tax cuts?

Oct 31 Dec 12 Jan 30

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

12%
Workers,
through
higher 5%
wages
8%

54%
Shareholders
and 51%
executives
54%

35%
Both
about 44%
equally
39%

CNBC Fed Survey – January 30, 2018

Page 6 of 31
 FED SURVEY
January 30, 2018

6. Using percentages, please tell us how you expect most

companies to allocate their gains from the tax cuts.
(Total should equal 100%)

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

Capital
investment 23%

Share
buybacks 22%

Dividends 14%

Debt
reduction 13%

Higher
employee 12%
wages
Lower
prices to 5%
consumers
Higher
executive 5%
salaries
Increase
cash 4%
holdings

Other 2%

CNBC Fed Survey – January 30, 2018

Page 7 of 31
 FED SURVEY
January 30, 2018

7. How will recent dollar weakness affect U.S. economic

growth?

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

Positive effect 51%

Little or no effect 44%

Negative effect 5%

Don't know/unsure 0%

CNBC Fed Survey – January 30, 2018

Page 8 of 31
 FED SURVEY
January 30, 2018

8. How do you view the recent Trump administration tariffs

on solar panels and washing machines?

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

Too soon to tell

if they are part of 46%
a shift or isolated

Part of a broader
policy shift toward
more import 39%
restrictions

Isolated actions
limited to these
particular industries 15%
and products

CNBC Fed Survey – January 30, 2018

Page 9 of 31
 FED SURVEY
January 30, 2018

9. In general, how do you view the Trump administration's

trade policies?

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

Negative for
U.S. economic 55%
growth

Too soon
to tell the
impact on U.S. 21%
economic
growth

Positive for
U.S. economic 16%
growth

Neutral for
U.S. economic 8%
growth

CNBC Fed Survey – January 30, 2018

Page 10 of 31
 FED SURVEY
January 30, 2018

10. Do you believe stock market valuations are at a level

where the Fed should be raising rates to cool the
market?

Oct 31 Dec 12 Jan 30

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

33%

Yes 24%

31%

62%

No 66%

64%

5%
Don't
know/ 10%
unsure
5%

CNBC Fed Survey – January 30, 2018

Page 11 of 31
 FED SURVEY
January 30, 2018

11. How concerned do you believe the average Fed

member is about stock market valuations?

Oct 31 Dec 12 Jan 30

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

9%
Very
concerned 5%
5%

70%
Somewhat
concerned 68%
82%

14%
Not at all
concerned 20%
10%

Don't
7%
know/ 7%
unsure
3%

CNBC Fed Survey – January 30, 2018

Page 12 of 31
 FED SURVEY
January 30, 2018

12. Please rate the performance of Janet Yellen and your

expected performance of Jerome Powell in the following
areas? (1=Very weak, 2=Weak, 3=Neutral, 4=Strong, 5=Very strong)

Yellen Powell

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

4.03
Leadership
3.68

3.92
Transparency
3.78

3.87
Communication
3.70

Economic 3.24
forecasting 2.95

Economic 4.42
expertise 2.76

Regulatory 3.50
expertise 4.05

Market 3.21
knowledge 3.81

Overall 3.97
monetary policy 3.51

Average for 3.77

all categories 3.53

CNBC Fed Survey – January 30, 2018

Page 13 of 31
 FED SURVEY
January 30, 2018

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

December 31, 2018 December 31, 2019

3,200

3005
3,000

2937
2862

2,800

2775

2708

2,600

2588 2593
2555 2564 2562

2480
2,400 2453

2,200

2,000

1,800
Dec Jan 31 Mar May Jun Jul Sep Oct Dec Jan
13 2017 14 2 13 25 19 31 12 30
2018
Survey Dates

CNBC Fed Survey – January 30, 2018

Page 14 of 31
 FED SURVEY
January 30, 2018

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

Treasury note will be on … ?

December 31, 2018 December 31, 2019

4.0%

3.5% 3.44% 3.43% 3.44%

3.37%
3.24%
3.22%

3.05% 3.03% 3.06% 3.07%

2.95%
3.0%

2.84%

2.5%

2.0%

1.5%

1.0%
Dec Jan Mar May Jun Jul Sep Oct Dec Jan
13 31 14 2 13 25 19 31 12 30
2017 2018
Survey Dates

CNBC Fed Survey – January 30, 2018

Page 15 of 31
 FED SURVEY
January 30, 2018

15. Where do you expect the fed funds target rate will
be on … ?
Dec 31, 2018 Dec 31, 2019 Dec 31, 2020

3.5%

3.0% 2.90%

2.73% 2.70% 2.67%

2.67%2.70% 2.68%
2.60%
2.56%
2.49% 2.80%
2.5%
2.54%
2.25% 2.42% 2.24%
2.17% 2.19%
2.22% 2.15% 2.14%
2.07% 2.06%
2.10% 2.03%
2.0% 1.87% 2.06%
1.81% 2.02%

1.78%
1.69%
1.5%

1.0%

0.5%

0.0%
Apr Jun Jul Aug Sep Nov Dec Jan Mar May Jun Jul Sep Oct Dec Jan
26 14 26 24 20 1 13 31 14 2 13 25 19 31 12 30
2017 2018

CNBC Fed Survey – January 30, 2018

Page 16 of 31
 FED SURVEY
January 30, 2018

16. 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% 3.18%
3.11%
3.06%
3.16%
2.98% 2.95%
3.0% 3.04% 2.94%
2.92%
2.85% 2.94%
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

Sep 20
Jan 26 '16

Sep 19
Jan 27, '15
Mar 17

Jun 16

Mar 15

Jun 14

Jan 31 '17

Oct 31
Jul 28

Jul 26

Mar 14

Jun 13

Jan 30 '18
Aug 20

Jul 25
Apr 28

Aug 25

Apr 26

Aug 24
Dec 16

Dec 15

Dec 13
Nov 1

May 2

Dec 12

Survey Dates

CNBC Fed Survey – January 30, 2018

Page 17 of 31
 FED SURVEY
January 30, 2018

17. 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
Oct 31 Q3
Dec 12 Q3
Jan 30, 2018 Q3

CNBC Fed Survey – January 30, 2018

Page 18 of 31
 FED SURVEY
January 30, 2018

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

percentage change in real U.S. GDP for …?
2018 2019

3.0%
2.94%

2.85%
2.85%
2.8% +2.76% +2.75%

2.61% 2.70%
+2.62%
2.6% 2.60%

+2.58%

2.4% +2.45% 2.45%

2.2%

2.0%

1.8%
Dec 13 Jan 31 '17 Mar 14 May 2 Jun 13 Jul 25 Sep 19 Oct 31 Dec 12 Jan 30 '18
2018 +2.76% +2.75% +2.62% +2.58% +2.45% 2.45% 2.60% 2.61% 2.85% 2.94%
2019 2.85% 2.70%

CNBC Fed Survey – January 30, 2018

Page 19 of 31
 FED SURVEY
January 30, 2018

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

percentage change in the headline U.S. CPI for …?
2018 2019

2.8%

2.64%

2.6% 2.57%
2.54%
2.50%
2.44%
2.38%
2.4%

2.28% 2.23% 2.32%

2.30%
2.2%

2.15% 2.14%

2.0%

1.8%

1.6%
Dec Jan Mar May Jun Jul Sep Oct Dec Jan
13 31 14 2 13 25 19 31 12 30
2017 2018
Survey Dates

CNBC Fed Survey – January 30, 2018

Page 20 of 31
 FED SURVEY
January 30, 2018

20. 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
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

CNBC Fed Survey – January 30, 2018

Page 21 of 31
 FED SURVEY
January 30, 2018

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
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

CNBC Fed Survey – January 30, 2018

Page 22 of 31
 FED SURVEY
January 30, 2018

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
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 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

Other responses:
• Political correctness • Overall debt levels
• Global trade, capital and monetary • Market turmoil
policy • Potential for significant correction as
• Exhaustion asset prices as Federal Reserve
• Slow productivity growth normalizes monetary policy

CNBC Fed Survey – January 30, 2018

Page 23 of 31
 FED SURVEY
January 30, 2018

21. 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% 13.7%

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% 19.3%
20% 20.3% 18.9%
18.8%
18.2% 18.4% 18.5%
19.1% 17.3% 18.6% 18.1%
16.9% 16.9%
17.6% 16.2% 16.4% 17.4%
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% 13.7%
13.0%

10%

CNBC Fed Survey – January 30, 2018

Page 24 of 31
 FED SURVEY
January 30, 2018

22. What is your primary area of interest?

Other
24%

Currencies
Economics
0% Fixed Income 49%
11%

Equities
16%

Comments:

Jim Bianco, President, Bianco Research: Inflation is the story of

2018. Either it ... 1) Returns and the story is higher long-term
interest rates and their effect on the markets and economy. 2) Does
not return and the story is a flatter yield curve as the Fed keeps
hiking short rates while long rates hold steady. Then we ask if the
Fed is overdoing it and causing a recession.

Peter Boockvar, Chief Investment Officer, Bleakley Advisory

Group: I join the optimism over tax reform and economic growth
but we still have an entire monetary tightening cycle to look forward
to globally and that is the biggest risk out there. Don't fear if you
believe in free lunches.

CNBC Fed Survey – January 30, 2018

Page 25 of 31
 FED SURVEY
January 30, 2018

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

Oxford Economics USA: Financial markets are now pricing in a
greater than 50% probability of three rates hikes and putting the
odds of a fourth rate hike at 22%. However, for the first time since
the Fed started tightening at the end of 2015, financial market
conditions are no longer getting easier. The sharp back up in long-
term rates has for now offset the weakening in the US dollar,
continued rise in equity prices, and further narrowing in corporate
bond spreads. Thus, this would suggest the Fed does not need to be
more aggressive this year. Thus, in our view, pricing in four rate
hikes is premature.

Robert Brusca, Chief Economist, Fact and Opinion Economics:

Growth is better in the US and abroad. But there is still little
evidence of inflation. My greatest fear is that the Fed's ongoing
peremptory moves to hike rates ahead of inflation will prove to be
too much too soon for an economy that simply is not creating
inflation and will not create much.

John Donaldson, Director of Fixed Income, Haverford Trust

Co.: The shift in relative value in the bond market as a result of the
FOMC's actions has been dramatic. The 2-year Treasury now yields
2.08%, its highest yield since September 2008. No Euro country
except Greece has a 10-year bond that yields 2% and most are still
below 1%. It has been a long time since the best opportunities in the
bond market can be had without taking a lot of duration risk.

Bill Dunkelberg, Chief Economist, National Federation of

Independent Business: Housing remains an area of concern, with
supply constraints producing worrisome increases in house prices.

CNBC Fed Survey – January 30, 2018

Page 26 of 31
 FED SURVEY
January 30, 2018

Neil Dutta, Head of Economic Research, Renaissance Macro

Research: The same people that advocated for loose monetary
policy to ease financial conditions through a lower USD exchange
rate are the same ones now complaining about Secretary Mnuchin's
latest comments on the dollar. Irony has died.

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

stimulative effect of the tax law change has likely been
underestimated in the market. Disposable income will get a boost
from lower withholding, the corporate tax cuts will boost investment,
and the surge in business and consumer confidence will have at least
some beneficial effect.

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

"new normal" was never normal. It was a great aberration, caused
by fallout from the financial crisis, overregulation, high oil prices, and
an uncompetitive corporate tax system. Those problems are all
behind us, and growth is moving back towards historical norms. The
weaker dollar won't have a big macroeconomic effect, but it will
boost activity in the tradable goods sector (manufacturing, mining,
and agriculture) at the expense of finance and real estate. After the
last 18 years, that's not a bad thing.

Art Hogan, Chief Market Strategist, B. Riley FBR: The slope of

the yield curve is more important than the inflation mandate right
now. A policy mistake that inverts the curve will not signal but
cause the next recession.

Ed Keon, Portfolio Manager, QMA, a PGIM Company: One

possible unintended consequence of the new tax law might be an
increase in tax avoidance by individuals, businesses, and state and
local governments as a function of the law’s complexity. This might
provide additional fiscal stimulus in 2018, though it might also add to
the deficit.

CNBC Fed Survey – January 30, 2018

Page 27 of 31
 FED SURVEY
January 30, 2018

Subodh Kumar, President, Subodh Kumar & Associates:

Caveat emptor on market momentum arises due to risk, value, and
societal stress about the distribution of the benefits of global growth.
Amid euphoria, diversification is necessary. In equities, valuation
contraction is globally a risk. More effort should be devoted to value
and progress in restructuring as opposed to momentum. In
overpriced fixed income, we favor short to medium duration with
junk bonds at risk from change. Amid currency volatility that we
expect, we favor precious metals for diversification.

Guy LeBas, Chief Fixed Income Strategist, Janney

Montgomery Scott: Late-cycle fiscal stimulus (i.e., the tax bill) is
likely to be absorbed by a slightly more eager Federal Reserve,
negating many of the economic benefits. Moreover, given the cycle-
low savings rate, the one-time wage bonus checks are likely to show
up as debt pay downs rather than long-term stimulus. Neither of
these things--the tax cuts or bonus checks--are bad for the
economy, they're just not very well timed.

Drew T. Matus, Chief Market Strategist, MetLife Investment

Management: Markets may be understating the impact of the tax
cut. We believe that there is the potential for consumers to respond
more positively to this tax cut than polls suggest. Further, the
percentage of the workforce over age 55 is nearly double that which
experienced the tax cuts in the early 2000s. For these workers this
tax cut might as well be permanent. They will have reached
retirement age before taxes revert to higher rates. Combined, these
factors could result in the consumer response to the tax cuts being
larger than most models may suggest.

Rob Morgan, Chief Investment Officer, Sethi: The January Fed

meeting is expected to be Janet Yellen's last as Fed Chair. It will be
interesting to see how she passes the baton to Jerome Powell.

CNBC Fed Survey – January 30, 2018

Page 28 of 31
 FED SURVEY
January 30, 2018

Joel Naroff, President, Naroff Economic Advisors: Too much of

a good thing is not a good thing and massive tax cuts when the
economy is solid and labor markets are tight create strong but risky
rates of growth.

Lynn Reaser, Chief Economist, Point Loma Nazarene

University: The balance of risks is now shifting to the upside in
terms of growth and inflation. As the market pushes rates higher,
the Fed risks falling behind for the first time since the recovery
began.

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

that the Fed may be forced to raise rates more rapidly than the
market is currently anticipating due to accelerating economic
conditions and a heating of the economy, something that could lead
to a pullback in equity markets when combined with rising rates that
make fixed-income instruments more competitive with equities.
However, we see that not occurring until sometime in the second
half of the year or early 2019, as we see the current market melt-up
pushing the S&P 500 above the 3200 level in the near term.

Chris Rupkey, Chief Financial Economist, MUFG: Never seen a

calmer time when it comes to the risks that keep one up at night.
The biggest risk is normally interest rate risk and the Fed isn't close
to taking away the punch bowl yet if they are just thinking three
baby step rate hikes this year to 2.25%.

John Ryding, Chief Economist, RDQ Economics: The early

readings on prices in 2018 suggest companies may be trying to push
through faster price increases, while the GDP data show demand
outstripping supply. Yellen should (but will not) raise rates this
week.

CNBC Fed Survey – January 30, 2018

Page 29 of 31
 FED SURVEY
January 30, 2018

Allen Sinai, Chief Global Economist and Strategist, Decision

Economics: U.S. and world economies lifted off into a new orbit;
maybe a Boom.

Richard D. Steinberg, CFA, Chief Investment Officer,

Steinberg Global Asset Management: A slow and measured rise
in rates, even if there are three hikes in 2018, will not be
competitive with historical stock market returns during 2018 and,
perhaps, extending into 2019. The inflection point for the stock
market may be if and when the ten-year Treasury yields 3.5%.

Diane Swonk, Chief Economist, Grant Thornton: The shift to

focus on dollar depreciation, tariffs and more hostile trade policies
ups the ante on retaliation, higher rates and more market volatility.
Markets may be partying like 1999, but there are still fewer people
on the dance floor than there were then. Prime age workers on the
sidelines are still elevated. Worse yet we have less in the medicine
cabinet to cure hangover when it hits.

Peter Tanous, Chairman, Lynx Investment Advisory: Beware

the creeping interest rate rise. The biggest, baddest effect will be the
enormous cost of servicing the US debt. At 5% (the average rate on
US bebt for the last 25 years), interest on US debt will consume two-
thirds of all personal income taxes collected.

Mark Vitner, Managing Director & Senior Economist, Wells

Fargo Securities: Tax reform is likely to prove more stimulative
than widely thought. Lower corporate rates will boost capital
spending and eventually pull productivity higher. Lower personal tax
rates should encourage more workers to enter and re-enter the
workforce and will likely encourage more baby boomers to stay in
the labor force, providing a boost to labor force growth and potential
GDP.

CNBC Fed Survey – January 30, 2018

Page 30 of 31
 FED SURVEY
January 30, 2018

Mark Zandi, Chief Economist, Moody's Analytics: Asset markets,

including stock, bond, real estate, and crypto-currency markets, are
significantly overvalued and at growing risk of significantly
correcting, particularly given the prospects for a more rapid
normalization in global monetary policy.

CNBC Fed Survey – January 30, 2018

Page 31 of 31