CNBC Fed Survey, December 17, 2013

FED SURVEY
December 17, 2013

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 December 12-13, 2013. 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. For all of 2013, 2014, and 2015 (and only in those years), what is the total amount of additional asset purchases the Federal Reserve will have made?
2013
$1,200 $1,023.7 $1,017.7 $1,000 $858.8 $800 $646.1 $600 Billions $400 $370.6 $367.1 $373.5 $374.8 $381.9 $200 $96.3 $497.0 $917.0 $936.6 $883.6 $948.5 $921.9 $941.9
2014
2015
$0
1/29/2013
4/30/2013
7/30/2013
9/17/2013
12/17/2013
CNBC Fed Survey December 17, 2013

Page 1 of 36
FED SURVEY
December 17, 2013 2. In what month do you expect the Fed to begin tapering its purchases?
Sept 17
60%
Oct 29
Dec 17
Averages
50%
40%
Jan 29: Dec 2013 March 19: Jan 2014 April 30: Feb 2014 June 18: Dec 2013 July 30: November 2013 Sep 6: November 2013 Sept 17: November 2013 Oct 29: April 2014
30%
Dec 17: February 2014 (Plurality of 33% said January)
20%
10%
0%

Page 2 of 36
FED SURVEY
December 17, 2013
3. By how much do you believe the Fed will reduce its asset purchases in that first month?
$25
$22.1
$20
$19.2
$15
$14.5
$14.2
$15.2
Billions
$12.6
On average, respondents believe the Fed will maintain its new level of asset purchases for 3.34 months.
$10
$5
$0 July 5 July 30 Sept 6 Sept 17 Oct 29 Dec 17

Page 3 of 36
FED SURVEY
December 17, 2013 4. What mix of Treasuries vs. mortgage-backed securities do you expect in the Federal Reserve's taper?
Treasuries
100%
MBS
90%
28%
80%
29%
36%
70%
60%
50%
40%
72%
30%
71%
64%
20%
10%
0% Sep 17 Oct 29 Dec 17

Page 4 of 36
FED SURVEY
December 17, 2013 5. When do you expect the Federal Reserve will completely stop purchasing assets?
June 18
30%
July 30
Sept 6
Sept 17
Oct 29
Dec 17
Averages
25%
20%
Jan 29: Nov 2013 Mar 19: May 2014 Apr 30: July 2014 Jun 18: July 2014 July 30: Aug 2014 Sept 6: Aug 2014 Sept 17: Aug 2014 Oct 29: Dec 2014 Dec 17: Dec 2014
15%
10%
5%
0%

Page 5 of 36
FED SURVEY
December 17, 2013 6. Based on your expectations for tapering, what percentage of the ultimate impact on each market is already discounted in the overall prices of that market?
July 30
90%
81% 81% 82% 81% 75%
Sept 6
Sept 17
Oct 29
Dec 17
80%
73%
70%
63%
71% 68%
70%
66% 58% 58%
60%
57% 50%
50%
40%
30%
20%
10%
0% Treasuries Equities Mortgages

Page 6 of 36
FED SURVEY
December 17, 2013 7. Compared to Ben Bernanke, Fed chair nominee Janet Yellen will be:
Oct 29
60%
Dec 17
52%
50%
44%
40%
33%
30%
28%
20%
15% 10% 10%
10%
2%
0% Much more dovish Somewhat No different more dovish
3% 0% 0%
Somewhat more hawkish
2%
Much more Don't hawkish know/unsure

Page 7 of 36
FED SURVEY
December 17, 2013 8. What grade would you give Fed Chairman Ben Bernanke?
Dec 22, 2010 Jan 23, 2012 Oct 29, 2013 0% July 21, 2011 Sept 17, 2013 Dec 17, 2013 10% 20% 26% 22% 23% 30% 21% 27% 42% B 48% 48% 48% 50% 46% 30% 40% 50% 60%
13%
22% 19% 18% 21% 22%
5% 5% D 2% 0% 5%
9%
Averages: Sept 17 survey:
B (3.00)
Oct 29 survey:
5% 3% 0% 2% 3% 0% 4% 7% 0% 5% 0%
B- (2.77)
Dec 17 survey:
Don't know/unsure
B (2.95)
Numerical average based on A=4, B=3, C=2, D=1, F=0

Page 8 of 36
FED SURVEY
December 17, 2013 Comments on this question:

Dean Baker, Center for Economic and Policy Research: (C) He should have highlighted to the public and Congress that he was using his post to keep Wall Street banks solvent that the market would have sank. There could and should have been major quid pro quos, like an agreement to downsize within 5 years, for being kept alive. Alan Blinder, Princeton University: (B) W/o Lehman, would be A Tony Crescenzi, PIMCO: (A) Ben Bernanke should be called The Decider for the bold decisions he made when the fiscal authority failed to act to take measures to promote growth. John Donaldson, Haverford Trust Co.: (A) He was the right person at what was a particularly difficult time. Mike Dueker, Russell Investments: (B) The grade for post-September 2008 would be A-plus. Stephen Gallagher, Societe Generale: (A) He always did what he believed was right for the country. Time may tell us that his monetary policy took pressure off fiscal policy, and therefore contributed to poor fiscal policy. Dennis Gartman, The Gartman Letter: (B) His actions in the autumn of '08 were "world saving" in nature and we all owe him a debt of gratitude. Stuart Hoffman, PNC: (A) National hero! Hugh Johnson, Hugh Johnson Advisors: (A) His thorough knowledge of financial and economic history as well as his quite sensible, practical approach to conduct of monetary policy as well as ability to ignore the noise of critics has been indispensable during the crisis and recovery. John Kattar, Ardent Asset Advisors: (C) Grade reduced because QE overstayed its welcome. Barry Knapp, Barclays PLC: (B) A for the crisis, incomplete from 2010-2013 as the costs will be realized over time. CNBC Fed Survey December 17, 2013
Page 9 of 36
FED SURVEY
December 17, 2013
David Kotok, Cumberland Advisors: (C) Too slow to change before Lehman-AIG debacle. Then, and after, he reacted decisively. Guy LeBas, Janney Montgomery Scott: (A) The Fed is the only central bank that managed a "first in, first out" policy when it comes to supporting the economy during the Financial Crisis/Great Recession. Donald Luskin, Trend Macrolytics: (B) Bernanke is a great patriot, and thank God he was on duty when the crisis hit. But no one is perfect, even him, so cant give an A. Rob Morgan, Fulcrum Securities: (B) I might have given him an 'A' if he hadn't discussed interest rate policy with a CNBC anchor at the White House Correspondents' Association Dinner in 2006. Lynn Reaser, Point Loma Nazarene University: (B) Chairman Bernanke excelled in preventing a financial crisis from engulfing the world economy, but policies were launched without a total game plan in mind. John Roberts, Hilliard Lyons: (B) Would probably offer a B+ if the answer was available. He definitely learned in the position, and became better as time went on. John Ryding, RDQ Economics: (C) A for handling the financial crisis but a D for the monetary policy leading up to the crisis (too easy) and the continuation of QE. Robert Shapiro, Sonecon: (B) A for crisis management and its aftermath, C for missing the crisis was coming. Stephen Stanley, Pierpont Securities: (C) Great in 2008 and 2009, horrible after the crisis. Diane Swonk, Mesirow Financial: (A) He averted the equivalent of a nuclear bomb for capitalism, although still damaged. Mark Zandi, Moody's Analytics: (A) We got lucky Bernanke was chairman during the Great Recession. He had the exact right skill set to navigate through the worst downturn since the depression.

Page 10 of 36
FED SURVEY
December 17, 2013 9. Looking back on the three QE programs, how do you believe history will judge them?
QE1
0% 10% 20% 30%
QE2
QE3
40% 50% 60% 70%
70%
80%
Essential
0%
10%
30%
Helpful 29%
0%
56%
Neutral
15%
20%
0%
Not needed
17%
22%
0%
Harmful
2%
24%
0% 0%
Don't know/unsure
5%

Page 11 of 36
FED SURVEY
December 17, 2013 10. Overall, how do you rate the clarity and credibility of Fed communications?
Oct 29
60%
Dec 17
55%
54%
50%
40%
30%
24% 21%
20%
18% 15%
10%
5%
7%
0% Very clear and Somewhat clear Somewhat not credible and credible clear and credible Not very clear and credible
0% 0%
Don't know/unsure

Page 12 of 36
FED SURVEY
December 17, 2013 11. Since September 2012, market functioning in the government bond market has:
70%
65%
60%
60%
58%
Stayed the same
same 50%
50%
47%
46% 42%
40%
30%
29%
Worsened somewhat
25% 19%
27%
20%
24%
15%
15%
10%
Improved somewhat
20% 16%
20% 15%
17% 11% 12% 2%

June 18
8%
Improved a lot
Worsened a lot
4% 2%
July 30
2%
0% March 19
2%
April 30
2%
Sept 17
3% 3%
Oct 29
0% 3%
Dec 17

Page 13 of 36
FED SURVEY
December 17, 2013 12. Since September 2012, market functioning in the mortgagebacked security market market has:
45%
41%
40%
42% 37%
Stayed the same
39%
35%
31%
30%
32% 31% 31%

Improved somewhat
29%
25%
29%
22%
20%
23% 21% 21% 20% 18%
22%
20%
15%
20%
20%
18%
Worsened somewhat
10%
Worsened a lot
5%
4% 2%
4%
5% 5%
6% 5% 4%
July 30
5%
5%
5% 3%
Oct 29 Dec 17
0% March 19
2%
April 30 June 18
Improved a lot
Sept 17

Page 14 of 36
FED SURVEY
December 17, 2013 13. Compared with the debate that just ended in the fall, the next round of discussions to raise the debt ceiling and fund the government will be:
July 30
100%
Sept 17
Oct 29
Dec 17
91%
90%
80%
70%
67%
60%
50%
49% 44%
40%
35%
27% 23%
30%
24% 19% 10%
20%
10%
7% 2%
About the same Less contentious
2%
0% More contentious
0% 0% 0%
Don't know/unsure

Page 15 of 36
FED SURVEY
December 17, 2013
14. What best describes your current attitude toward the effects of the financial crisis?
100%
90%
90%
80%
70%
60%
50%
40%
30%
20%
10%
10% 0%
It's over Effects still linger
0%
0%
Effects still in full Don't know/unsure force

Page 16 of 36
FED SURVEY
December 17, 2013 15. Where do you expect the S&P 500 stock index will be on ?
December 31, 2013
1,900
June 30, 2014
December 31, 2014
1857
1,850
1816 1814
1,800
1773 1751 1752 1753 1709 1691 1655 1654 1685 1723
1,750
1,700
1,650
1612
1,600
1589
1547
1,550
1,500 Jan 29 2013 Mar 19 Apr 30 Jun 18 Jul 30 Sep 6 Sep 30 Oct 29 Dec 17
Survey Dates

Page 17 of 36
FED SURVEY
December 17, 2013 16. What do you expect the yield on the 10-year Treasury note will be on ?
December 31, 2013
4.0%
June 30, 2014
December 31, 2014
3.5%
3.33% 3.10% 3.00%
3.39% 3.02% 3.00%
3.44% 3.18% 2.88% 2.65%
3.0%
2.80% 2.41% 2.10%
2.73%
2.5%
2.31%
2.35%
2.0%
1.5%
1.0%
0.5%
0.0% Jan 29 2013 Mar 19 Apr 30 Jun 18 Jul 30 Sep 6 Sep 30 Oct 29 Dec 17
Survey Dates

Page 18 of 36
FED SURVEY
December 17, 2013 17. What is your forecast for the year-over-year percentage change in real U.S. GDP for ?
2013
3.0%
2014
2.5%
2.0%
1.5%
1.0%
Janu ary Mar 23, 16 2012
Apr 24
Jul 31
Sep 12
Dec 11
Jan Mar 29, 19 2013
Apr 30
Jun 18
Jul 30
Sep 17
Oct 29
Dec 17
2013 +2.6 +2.7 +2.6 +2.3 +2.2 +1.9 +2.1 +2.1 +2.1 +2.1 +1.9 +2.0 +1.9 +2.2 2014 +2.6 +2.6 +2.6 +2.6 +2.5 +2.6 +2.5 +2.6 Survey Dates

Page 19 of 36
FED SURVEY
December 17, 2013 18. Compared to last year, the holiday shopping season will be:
Oct 29
60%
Dec 17
51%
50%
40%
35% 31% 29%
30%
23%
20%
17%
10%
8% 2% 4% 0%
Don't know/unsure
0%
0%
A lot better Somewhat better The same Somewhat worse
0%
A lot worse

Page 20 of 36
FED SURVEY
December 17, 2013 19. What impact will the new health care law have on near-term economic growth?
70%
63.4%
60%
50%
40%
30%
29.3%
20%
10%
7.3%
0% Lower growth No effect on growth
0.0%
Stronger growth Don't know/unsure

Page 21 of 36
FED SURVEY
December 17, 2013 What are the primary channels for that impact?
35%
32%
30%
25%
20%
19%
15%
13%
13%
10%
7%
5%
7%
7%
3%
0%

Page 22 of 36
FED SURVEY
December 17, 2013
Comments: Dean Baker, Center for Economic and Policy Research: There will be more early retirement (full or partial) which will offset the plus of additional government spending. Barry Knapp, Barclays PLC: The much larger effect will come after the small business exemptions expire - for now it is primarily a political factor that the markets will likely respond favorably to next fall. David Kotok, Cumberland Advisors: Uncertainty over health care law slows recovery in employment. Subodh Kumar, Subodh Kumar & Associates: As more people get covered, costs can be expected to increase on front end but over long term should even out as system efficiencies get enhanced. Guy LeBas, Janney Montgomery Scott: The impact of the ACA is far longer-term in nature, and hard (if not impossible) to measure over a few-quarter period. Lynn Reaser, Point Loma Nazarene University: Health care providers, especially hospitals, are being hurt by losses by Medicare and Medicaid patients and the inability to now shift costs to other constituents as insurance companies step up their bargaining. The health care sector could lose its historical role as a primary economic driver as the industry consolidates and strives to reduce costs. John Roberts, Hilliard Lyons: Creates uncertainty that will result in less business formation and hiring by businesses. Diane Swonk, Mesirow Financial: Too early to tell effects that will take years to play out. Uncertainty with botched launch, however, was a clear negative, just difficult to measure.

Page 23 of 36
FED SURVEY
December 17, 2013 20. What impact will the new health care law have on long-term economic growth?
70%
60%
58%
50%
40%
30%
23%
20%
13%
10%
8%
0% Lower growth No effect on growth Stronger growth Don't know/unsure

Page 24 of 36
FED SURVEY
December 17, 2013 What are the primary channels for that impact?
25%
23%
23%
20%
16%
15%
10%
10%
10%
10%
5%
3%
3%
3%
0%
Other responses:
Stronger growth: Healthier workforce Lower growth: Higher taxes and government spending No effect on growth: Improved efficiency No effect on growth: More long-term impact on access than on economic growth

Page 25 of 36
FED SURVEY
Comments:
December 17, 2013
Dean Baker, Center for Economic and Policy Research: We will also see more business start-ups. Subodh Kumar, Subodh Kumar & Associates: Long-term impact is one to improve health care spending efficiency by companies and government alike. Guy LeBas, Janney Montgomery Scott: Requiring consumers to buy health care reduces the uncertainty of future earnings and should improve spending marginally, but much of the impact will be offset by shifts in the cost of labor on the part of businesses. John Lonski, Moody's: Will function as an effective tax hike for middle- to upperincome consumers who do the bulk of the spending. Donald Luskin, Trend Macrolytics: People won't be as productive when their government treats them as slaves. Lynn Reaser, Point Loma Nazarene University: The Affordable Care Act does little to control costs but only increases demand. That will strain both public and private finances.

Page 26 of 36
FED SURVEY
December 17, 2013 21. When do you think the FOMC will first increase the fed funds rate?
Increase fed funds rate (Average response)
Survey Date Dec 11, 2012 2013 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4

2017 or later
2015 Q1 2015 Q1 2015 Q1 2015 Q2 2015 Q2 2015 Q3 2015 Q2 2015 Q3 2015 Q3 2015 Q3
Jan 29, 2013
Mar 19, 2013
Apr 30, 2013
Jun 18, 2013
Jul 30, 2013
Sept 6, 2013
Sept 17, 2013
Oct 29, 2013
Dec 17, 2013

Page 27 of 36
FED SURVEY
December 17, 2013 22. Currently, Fed policy is not to raise interest rates until the unemployment rate is at least 6.5%. Will the Fed change that guidance?
Jul 30
70%
Sep 17
Oct 29
Dec 17
60%
60%
On average, those answering yes thought the new rate will be 5.9%
50%
49% 47% 44%
51% 44% 42%
40%
30%
30%
20%
10%
10%
4%
11%
7%
0% Yes No Don't know/unsure

Page 28 of 36
FED SURVEY
December 17, 2013 24. Where do you expect the fed funds target rate will be on ?
1.0%
0.97% 0.92%
0.8%
0.82%
0.70%
0.6%
0.4%
0.33%
0.28%
0.27%
0.20% 0.18% 0.21% 0.17% 0.16% 0.19% 0.19% 0.16% 0.15% 0.13%
0.21%
0.21%
0.20%
0.2%
0.14%
0.13%
0.14%
0.13%
0.11%
0.12%
0.0%
Dec 31, 2013 June 30, 2014 Dec 31, 2014 Dec 31, 2015
Jan Jul Sep Dec Mar Apr Jun Jul Sep Sep Oct Dec 29 31 12 11 19 30 18 30 6 17 29 17 '13 0.33 0.27 0.21 0.17 0.19 0.19 0.16 0.15 0.13 0.13 0.11 0.12 0.20 0.18 0.16 0.14 0.13 0.14 0.28 0.21 0.21 0.20 0.97 0.92 0.82 0.70

Page 29 of 36
FED SURVEY
December 17, 2013 25. 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%
35% 34.0% 30%
36.1%
28.5% 25.9% 25.5% 26.0% 20.6% 19.1%
25%
20%
20.3%
20.4% 17.6%
18.2% 16.9% 16.2%
18.4% 17.3%
15%
15.2%
10%
5%
0%
Survey Dates

Page 30 of 36
FED SURVEY
December 17, 2013 26. What is the single biggest threat facing the U.S. economic recovery?
Apr 30 Jun 18 0% European recession/financial crisis Tax/regulatory policies Slow job growth High gasoline prices Overall inflation Deflation Debt ceiling Too little budget deficit reduction Too much budget deficit reduction Rise in interest rates Other Don't know/unsure Too Too little European High Tax/regul much Debt Overall Slow job budget recession budget Deflation gasoline atory deficit /financial ceiling inflation growth prices policies deficit reduction crisis reduction 9% 2% 2% 2% 0% 2% 20% 31% 20% 13% 10% 18% 8% 15% 4% 4% 5% 2% 2% 0% 2% 3% 2% 0% 2% 4% 3% 2% 3% 2% 0% 3% 0% 3% 0% 2% 3% 2% 2% 4% 7% 3% 5% 20% 22% 22% 24% 29% 28% 30% 27% 29% 32% 15% 8% 4% 8% 5% Jul 30 5% Sep 17 10% Oct 29 15% Dec 17 20% 25% 30% 35%
Don't know/un sure Apr 30 Jun 18 Jul 30 Sep 17 Oct 29 Dec 17 0% 0% 4% 2% 0% 2%
Other
Rise in interest rates
11% 13% 14% 7% 13% 2%

Page 31 of 36
FED SURVEY
December 17, 2013 27. What is your primary area of interest?
FED SURVEY
April 30,
Other 20%
Currencies 2% Fixed Income 20%
Economics 42%
Equities 17%
Comments: Tony Crescenzi, PIMCO: Twas the night before the September Fed meeting, when all through the house, Not a computer was stirring, not even its mouse; The sell tickets were stacked throughout the trade floor with care, In fret that Ben Scrooge Bernanke soon would be there. Then on the wires there arose a surprise clatter, The Fed said no taper it wants to make wallets fatter! Into the dustbin went the red tickets in a flash, Today there is joy the Feds printing cash! In May, Federal Reserve Chairman Ben Bernanke surprised many investors when he hinted that the Fed might reduce its monthly bond buying. His words sent the markets into turmoil, in particular the global bond market, sending one of the strongest messages of 2013
Page 32 of 36
FED SURVEY
December 17, 2013 to the Fed and markets. What the Fed hoped would happen didnt. It hoped that its cumulative bond buying would keep interest rates SURVEY stable even if FED it hinted at a reduction in monthly purchases. In other April 30, the stock effect of its purchases to be more words, the Fed expected potent than the flow effect. This makes intuitive sense, after all. Why should a reduction of, say, billion out of billion in monthly purchases upset the bond market when the Fed had already bought trillions of dollars worth of bonds, bonds that the Fed may never sell, thereby leaving investors with plenty of money to invest in their wish list of favorite things? This is why it is pivoting to place emphasis on forward guidance. The Fed thought it did something nice. But instead, something nice turned into something naughty, because the Fed spoiled investors with its bond buying and lulled them to sleep before awakening them with the taper clatter. So, when Santa checks his list, he might just decide to put coal instead of gifts in the Feds stock-ing. The summer turbulence showed that the Fed in the end seems to have about as much to give to the global economy as a mall Santa can give to a curlicued little girl. John Donaldson, Haverford Trust Co.: The budget deal makes a taper more likely. Bernanke was very pointed during his September press conference that the budget/debt ceiling mess was a concern to the FOMC. This deal removes that concern and opens the door to a taper. Mike Dueker, Russell Investments: The U.S. economy should achieve nominal GDP growth next year of 4.5 percent after being stuck barely above 3 percent for several years. The Fed's quantitative easing policy should be considered a smashing success by this measure, especially relative to Europe and Japan. Dennis Gartman, The Gartman Letter: Dr. Bernanke truly saved capitalism with his aggressive injection of reserves in the autumn of '08, and although the 2nd and 3rd rounds of QE were perhaps a step too far what he did then should never be forgotten and always be
Page 33 of 36
FED SURVEY
congratulated.
December 17, 2013
FED SURVEY Kevin Giddis, Raymond James/Morgan Keegan: While all signs April 30, seem to indicate that we have turned the corner, I remain concerned over the quality of the jobs created, and their ability to push spending upward beyond the current levels. Growth...slow. Quality Jobs...few. Rates...low.
Stuart Hoffman, PNC: The U.S. economy is ending 2013 on a solid note and that will continue throughout 2014 in harmony with global economic improvement. This will be beautiful music to the ears of stock investors but static to the ears of bond investors. John Kattar, Ardent Asset Advisors: Tapering is coming, and I expect QE to be reduced by 40% for the full year 2014 vs. 2013. But that's still a lot of money. After some early volatility around the taper announcement, stocks should have another good year. Barry Knapp, Barclays PLC: The timing of the first hike discounted by the eurodollar market is reasonable however the expected pace of removal of policy accommodation from 2015-2018 is way too passive. For this reason any offsetting compensation in forward rate guidance for the reduction in asset purchases is likely to be unsuccessful. In other words the belly of the Treasury curve is vulnerable to rate hikes getting pulled forward. Equities will correct through this process as they have in every business cycle since WWII when Fed policy attempts to catch-up to the improvement in the outlook that has already been discounted by the yield curve and stock market. David Kotok, Cumberland Advisors: In 100 years of history, the Fed has never confronted anything like the present policy transition. The Yellen Fed will be writing a new chapter in central banking archives.

Page 34 of 36
FED SURVEY
December 17, 2013 Subodh Kumar, Subodh Kumar & Associates: In the real world, the winds of change can be unpredictable, if not unforgiving. The FED winds of change areSURVEY existent in finance, notably both for the genteel April 30, and for less rarified business circles. world of central banking Consumers worldwide seem more inclined to frugal spending after a prolonged tryst with aspirational luxury. Companies may be at the tail-end of gains from costs declining. Consensus appears to assume all of revenue growth, maintaining of high margins and low interest rates can occur. Market participants need to watch for currency driven volatility affecting policy and politics from governments and central banks. Fixed income and equities could both dip into mid2014 before equities engage in recovery into year-end 2014, albeit at below current levels based on broader 2015 global recovery. Guy LeBas, Janney Montgomery Scott: Tax policy uncertainty in the U.S. makes it tougher for businesses to invest in new projects long-run. For businesses considering building, say, a new plant, the risks of tax policy uncertainty outweigh the costs of building abroad and shipping the products back to the U.S. John Lonski, Moody's: The high-yield bond spread has narrowed to a new-cycle low of less than 400 bp despite mounting evidence of an impending taper. Apparently, the corporate credit market senses only a limited upturn by Treasury yields that will not be especially burdensome to the U.S.' subpar recovery. By contrast, when tapering expectations first emerged in May-June 2013, the high-yield bond spread swelled from 407 bp to 528 bp. Rob Morgan, Fulcrum Securities: The Fed will begin tapering at Janet Yellen's first meeting as Fed chair in March 2014. James Paulsen, Wells Capital Management: In 2014, the most important aspect of Fed policy is not whether the Fed tapers. Rather, it will be the nature of the taper. Will it be a controlled, steady, methodical taper or will it prove a "panic taper," one
Page 35 of 36
FED SURVEY
December 17, 2013 whereby a consensus believes the draining of QE-created excess reserves needs to be accomplished quickly. What may start out as a FED SURVEY controlled taper probably mutates into a panic taper as the year April 30, progresses. Why? Because money velocity turns up for the first time in this recovery causing Fed policy to instantly look behind the curve and overdone. Lynn Reaser, Point Loma Nazarene University: After five years of extraordinary monetary ease, Federal Reserve officials are wary of removing the "training wheels" too soon. At some point, the economy will need to ride on its own, but policymakers are worried about inflicting too many scrapes and bruises along the way. John Roberts, Hilliard Lyons: Easy money could continue longer than the market currently anticipates as Chairman Bernanke's policies give new Chairman Yellen cover to be accommodative for a longer period of time to more quickly reduce unemployment. This is especially salient if the neutering of the filibuster allows the president to stock the Fed with more dovish members. Recent improving economic statistics does, however, lessen this risk to some degree. John Ryding, RDQ Economics: What else does the Fed need to see to announce a taper? Job growth is running at 200K per month, real GDP was 3.6% in Q3 and Q4 is looking fairly strong (ISM, jobs, retail sales, jobless claims). Diane Swonk, Mesirow Financial: The Fed's intent will be to taper asset purchases without tapering stimulus; the trick will be for them effectively convey that message.

Page 36 of 36

CNBC Fed Survey, December 17, 2013

Diunggah oleh

Informasi Dokumen

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

CNBC Fed Survey, December 17, 2013

Diunggah oleh

Hak Cipta:

Format Tersedia

FED SURVEY

December 17, 2013