FED SURVEY

December 15, 2015

These survey results represent the opinions of 42 of the nations top money managers,
investment strategists, and professional economists.

FED SURVEY

They responded to CNBCs invitation to participate in our online survey. Their responses were
collected on December 10-11, 2015. Participants were not required to answer every question.

April 30,

Results are also shown for identical questions in earlier surveys.

This is not intended to be a scientific poll and its results should not be extrapolated beyond those
who did accept our invitation.

1. Will the Federal Reserve raise the federal funds rate at

its December meeting?
100%

95%

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

5%
0%

0%
Yes

CNBC Fed Survey December 15, 2015

Page 1 of 27

No

Don't know/unsure

FED SURVEY
December 15, 2015
2. When do you believe the Fed will first increase the fed
funds rate? (Only asked if response was no to previous
FED SURVEY
question.)
April 30,
0%

10%

20%

Jan 16

30%

40%

50%
50%

Feb
Mar
Apr

May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan 17
Feb
Mar

After Mar 17

CNBC Fed Survey December 15, 2015

Page 2 of 27

50%

60%

FED SURVEY
December 15, 2015
3. How many times will the Federal Reserve hike rates next
year (2016)?

FED
0% SURVEY
5%
April 30,
0

10%

15%

20%

25%

2%
12%

29%

21%

29%

7%

Average:

2.8

9
10
More than 10
Fed will cut rates
Don't know/unsure

CNBC Fed Survey December 15, 2015

Page 3 of 27

30%

35%

FED SURVEY
December 15, 2015
4. How much will the following areas be helped or hurt by a
Fed rate hike or hikes this year and next? (On scale of -5 to 5)

FED SURVEY
April 30,

Hurt
-5
-4

Stock prices

Bond prices

-3

Average response
Neutral
-1
+0
+1

-2

-0.80

-1.20

Consumer spending

0.02

Business investment

-0.15

Overall economic growth

-0.20

Housing

CNBC Fed Survey December 15, 2015

Page 4 of 27

-0.68

+2

+3

Helped
+4
+5

FED SURVEY
December 15, 2015
5. Where do you expect the S&P 500 stock index will be on
?

FED SURVEY
December 31, 2016

December 31, 2017

April 30,
2,350

2311
2296

2,300

2293

2259

2,250

2254

December 31, 2017

2247

2223

2,200

2166
2159

2,150

2140
2,100

2,050
Dec 16

Jan 27
'15

Mar 17 April 28

Jun 16
Survey Dates

CNBC Fed Survey December 15, 2015

Page 5 of 27

Jul 28

Sept 16

Oct 27

Dec 15

FED SURVEY
December 15, 2015
6. What do you expect the yield on the 10-year Treasury
note will be on ?

FED SURVEY
December 31, 2016
April 30,

December 31, 2017

4.0%

3.52%

3.5%
December 31, 2017

3.24%
3.17%

3.14%

3.0%

3.09%

3.04%
2.89%

2.88%

2.67%

2.67%

Sept 16 Oct 27

Dec 15

2.5%

2.0%
Dec 16

Jan 27
'15

Mar 17 April 28

Jul 16
Survey Dates

CNBC Fed Survey December 15, 2015

Page 6 of 27

Jul 28

FED SURVEY
December 15, 2015
7. What is your forecast for the year-over-year percentage
change in real U.S. GDP for ?

FED SURVEY2015

2016

April 30,

2017

3.1%
+3.02%
+3.00%

+3.02%
+2.99%

3.0%

+2.90%+2.90%
+2.88%

+2.90%

2.9%

+2.84%
+2.81%
+2.78%

2.8%

+2.81%

+2.80%
+2.70%

+2.75%

2.7%

+2.70%
+2.64%

+2.69%

+2.60%

2.6%

2.5%
+2.43%
+2.45%
+2.41%
+2.43%

2.4%
+2.32%

2.3%

+2.29%
+2.25%

2.2%

December 31, 2017

2.1%

Jan
28,
'14

Mar
18

Apr
28

Jun 4

Jul
29

Sep
16

Oct
28

Dec
16

Jan
27,
'15

Mar
17

April
28

Jun
16

Jul
28

Sept
16

Oct
27

Dec
15

2015 +2.90 +3.02 +3.00 +2.81 +2.75 +2.90 +2.90 +3.02 +2.99 +2.69 +2.70 +2.25 +2.41 +2.43 +2.32 +2.29
2016

+2.88 +2.80 +2.84 +2.81 +2.78 +2.70 +2.64 +2.60 +2.45

2017

+2.43

CNBC Fed Survey December 15, 2015

Page 7 of 27

FED SURVEY
December 15, 2015
8. What is your forecast for the year-over-year percentage
change in the headline U.S. CPI for ?

FED SURVEY
April 30,

2015

2016

2017

2.5%

2.29%

2.29%2.27%
2.17%

December 31, 2017

2.17%

2.12%

2.08%
2.0%

2.02%

2.01%

2.07%

1.88%
1.96%
1.89%

1.74%

1.75%

1.5%

1.17%
1.10%
1.17%
1.0%

1.01%1.00%

0.84%
0.83%

0.63%

0.5%
Jun 4 Jul 29 Sep
16

Oct
28

Dec
16

Jan
27,
'15

Mar
17

April
28

Survey Dates

CNBC Fed Survey December 15, 2015

Page 8 of 27

Jun Jul 28 Sept

16
16

Oct
27

Dec
15

FED SURVEY
December 15, 2015
9. Assuming the Federal Reserve raises the fed funds target
range to between 0.25% and 0.50% at its December
FED
SURVEY
meeting,
where
do you expect the fed funds rate to trade
Apriluntil
30, the next meeting?
on average
1.20

1.00

0.80

0.60

Average: 0.37%
0.40

0.20

0.00

Responses sorted by size

CNBC Fed Survey December 15, 2015

Page 9 of 27

FED SURVEY
December 15, 2015
After an initial hike, when do you believe the Fed will next
increase the fed funds rate?
0%
Jan 16
Feb

FED 10%
SURVEY
20%
April 30,

30%

40%

May

5%
58%
5%
3%
20%

Jun
Jul
Aug
Sep

3%

Oct

3%

Nov
Dec
Jan 17
Feb
Mar
After Mar 17

3%

CNBC Fed Survey December 15, 2015

Page 10 of 27

60%

3%

Mar
Apr

50%

Average:

April 2016

70%

FED SURVEY
December 15, 2015
10.
When do you expect the Fed to allow its balance
sheet to decline?

FED SURVEY
April 30,

Survey Date

Balance Sheet
Average Forecast

April 28, 2014 survey

October 2015

June 4 survey

March 2016

July 29 survey

December 2015

August 20 survey

Not asked

September 16 survey

December 2015

October 28 survey

January 2016

December 16 survey

February 2016

Jan. 27, 2015 survey

April 2016

March 17 survey

April 2016

April 28 survey

May 2016

June 16 survey

July 2016

July 28 survey

June 2016

August 25 survey

September 2016

September 16 survey

August 2016

October 27 survey

November 2016

December 15 survey

December 2016

CNBC Fed Survey December 15, 2015

Page 11 of 27

FED SURVEY
December 15, 2015
11.
Assuming a hike at the December meeting, how
would you characterize the Fed's monetary policy?

FED SURVEY

(Previously: How would you characterize the Fed's current monetary poli

April
30,
Too
accommodative

Just right

Too restrictive

Don't know/unsure

70%
64%
60%

Too accomodative

60%

54%
49% 49% 49% 49%

50%
43%

50%
44%

47%

46%

47%

49%

43% 44%

43%

40%

50% 50%

54%

39%

33%
35%

32%

32%

30%

Just right

28%

23%
20%

17%
Don't know/unsure

10%

13%

6%

6%

5%

3%
3%

0%

3%

6%
6%

3%

3%

8%
6%

3%
5%

3%
Too restrictive

6%
0%

Jul 31, Jul 29, Aug 20 Sep 16 Oct 28 Dec 16 Jan 27, Mar 17 Apr 28 Jun 16 Jul 28
'12
'14
'15

CNBC Fed Survey December 15, 2015

Page 12 of 27

10%

10%

8%

8%

4%
Sept
16

5%
Oct 27 Dec 15

FED SURVEY
December 15, 2015
12. Where do you expect the fed funds target rate will be
on ?

FED SURVEY
Dec 31, 2016

Dec 31, 2017

April 30,

2.5%

2.13%

2.04%

1.99%

1.93%

2.0%

December 31, 2017

1.84%

1.75%

1.61%

1.56%

1.5%

1.41%

1.46%
1.17%

1.12%

1.0%

0.91% 0.90%

0.5%

0.0%
Aug
20

Sep
16

Oct
28

Dec
16

Jan
27,
'15

Mar
17

CNBC Fed Survey December 15, 2015

Page 13 of 27

April
28

Jun Jul 28 Aug

16
25

Sept
16

Oct
27

Dec
15

FED SURVEY
December 15, 2015
13.
At what fed funds level will the Federal Reserve stop
hiking rates in the current cycle? That is, what will be the
SURVEY
terminalFED
rate?
April 30,
4.0%

3.5%
3.30%
3.20%

3.17%
3.11%
3.04%

3.16%

3.06%
2.98%

3.0%

2.79%

2.85%

2.69%
2.5%

2.65%
2.58%

2.0%
Aug Sep
20
16

Oct
28

Dec
16

Jan
27,
'15

Mar
17

Apr
28

Jun
16

Survey Dates

CNBC Fed Survey December 15, 2015

Page 14 of 27

Jul
28

Aug Sept Oct

25
16
27

Dec
15

FED SURVEY
December 15, 2015
14.
When do you believe fed funds will reach its
terminal rate?

FED SURVEY
April 30,

Survey Date

Forecast

August 20 survey

Q4 2017

September 16 survey

Q3 2017

October 28 survey

Q4 2017

December 16 survey

Q1 2018

Jan. 27, 2015 survey

Q1 2018

March 17 survey

Q4 2017

April 28 survey

Q1 2018

June 16 survey

Q1 2018

July 28 survey

Q2 2018

August 25 survey

Q3 2018

September 16 survey

Q1 2018

October 27 survey

Q3 2018

December 15 survey

Q1 2018

CNBC Fed Survey December 15, 2015

Page 15 of 27

FED SURVEY
December 15, 2015
15.
Has the U.S. stock market already discounted a fed
funds rate hike by the Federal Reserve this year?

FED SURVEY
Yes
April 30,

90%

No

Don't know/unsure

80%

80%

Yes
70%
61%
60%

56%

53%

53%

59%

55%
50%

56%

50%

50%
47%

47%

40%
36%

39%

38%

38%

36%

38%
33%

30%

No
20%

10%

Don't know/unsure
8%

12%

9%

21%
10%

6%

8%

3%

0%

0%

0%

0%

Dec 16 Jan 27 Mar 17 Apr 28 Jun 16 Jul 28 Aug 25 Sep 16 Oct 27 Dec 15
Survey dates

CNBC Fed Survey December 15, 2015

Page 16 of 27

FED SURVEY
December 15, 2015
Has the U.S. bond market already discounted a fed funds
rate hike by the Federal Reserve this year?

FED SURVEY
Yes
April 30,

90%

No

Don't know/unsure
85%

Yes
80%
72%
70%

67%
62%

60%

60%

56%
52%

50%

40%

43%

42%

40%
33%

30%

35%

26%
20%

Don't know/unsure

No
15%

10%
3%

3%

5%

0%

0%

3%

0%

0%
Apr 28

Jun 16

Jul 28

CNBC Fed Survey December 15, 2015

Page 17 of 27

Aug 25
Survey dates

Sep 16

Oct 27

Dec 15

FED SURVEY
December 15, 2015
16.
What is the single biggest threat facing the U.S.
economic recovery?

FED SURVEY

Jan 28 '14
Mar 18
Apr 28
Jul 29
Sep 16
Oct 28
Dec 16
Jan 27 '15
Mar 17
April 28
Jun 16
Jul 28
Sept 16
Oct 27
Dec 15

CNBC Fed Survey December 15, 2015

Page 18 of 27

10%
18%
8%
15%
12%
5%
8%
12%
6%
10%
3%
6%
6%
6%
14%
12%
0%
8%
8%

18%
12%
11%
8%
14%
16%
8%
11%
25%
6%
8%
13%
10%

41%
28%
28%
22%
29%
45%
41%
44%

6%
17%
8%
6%
9%
8%
10%
5%

Terrorist attacks in the

U.S.

2%
0%
2%
4%
3%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%

Slow wage growth

2%
3%
2%
0%
3%
0%
0%
5%
5%
3%
3%
3%
6%
0%
6%
0%
0%
0%
4%
8%
0%

Global econ weakness

0%
3%
0%
2%
3%
2%
2%
3%
3%
6%
6%
3%
3%
0%
3%
3%
0%
0%
0%
3%
0%

Geopolitical risks

20%
20%
22%
22%
24%
29%
30%
26%
21%
12%
29%
15%
14%
9%
0%
8%
3%
9%
2%
5%
5%

Rise in interest rates

31%
28%
30%
27%
29%
32%
21%
23%
26%
29%
26%
18%
14%
13%
14%
11%
17%
21%
16%
8%
10%

3%

Don't know/
unsure

Dec 17

20%
15%
8%
4%
8%
5%
7%
10%
3%
12%
6%
31%
40%
0%
6%
3%
3%
6%
0%
0%
0%

Other

Oct 29

Debt ceiling

Sep 17

Deflation

Jul 30

Inflation

Jun 18

Slow job growth

Apr 30

Tax/
regulatory policies

Survey
Date

European recession/
financial crisis

April 30,

11%
13%
14%
7%
13%
2%
21%
18%
13%
12%
11%
8%
3%
16%
14%
19%
11%
9%
14%
5%
15%

0%
0%
4%
2%
0%
2%
0%
0%
0%
3%
3%
3%
0%
0%
0%
3%
0%
0%
2%
0%
0%

FED SURVEY
December 15, 2015
17.
In the next 12 months, what percent probability do
you place on the U.S. entering recession? (0%=No
FED
SURVEY
chance of
recession,
100%=Certainty of recession)
April 30,
40%
36.1%

35%
34.0%

30%

28.5%

25.9%

25%

26.0%

25.5%

22.9%
22.1%

20%

20.3%

20.6%

20.4%

18.4%

18.2%

17.3%

19.1%
17.6%

15%

16.9%

18.6%
16.2%

17.4%

15.1%

16.9%
16.2%
15.3%

15.2%

16.4%

14.6%

15.1%

15.0%

14.7%
13.6%
13.0%

10%

5%

0%

Aug
11,
'11

Sep
19

Oct
31

Jan
23,
'12

Mar
16

Apr
24

Jul
31

Sep
12

Dec
11

Jan
29,
'13

Mar
19

Apr
30

Jun
18

Jul
30

Sep
6

Oct
29

Dec
17

Jan
28
'14

Mar
18

Apr
28

Jul
29

Sep
16

Oct
28

Dec
16

Jan
27
'15

Mar April Jun

17
28
16

Jul
28

Sept
16

Oct
27

Dec
15

Series1 34.0 36.1 25.5 20.3 19.1 20.6 25.9 26.0 28.5 20.4 17.6 18.2 15.2 16.2 16.9 18.4 17.3 15.3 16.9 14.6 16.2 15.0 15.1 13.6 13.0 16.4 14.7 15.1 17.4 18.6 22.1 22.9

Survey Dates

CNBC Fed Survey December 15, 2015

Page 19 of 27

FED SURVEY
December 15, 2015
18.
Please rate the members of the Federal Open Market
Committee on a scale of 0 to 10, with 0 being the most
FED10SURVEY
dovish and
being the most hawkish.
April 30, Blue=2015 & 2016 voting member
Red=2015 voting member
Green = 2016 voting member
0

Charles L. Evans, Chicago

Lael Brainard, Board of Governors

2.33
2.91
3.18

William C. Dudley, NY, Vice Chairman

3.26

4.28

2016 voters

4.66

3.69

Daniel K. Tarullo, Board of Governors

3.76

Jerome H. Powell, Board of Governors

4.47

John C. Williams, San Francisco

4.48

Dennis P. Lockhart, Atlanta

5.06

Stanley Fischer, Board of Governors

5.09

Esther L. George, Kansas City

Jeffrey M. Lacker, Richmond

CNBC Fed Survey December 15, 2015

Page 20 of 27

2015 voters

Janet L. Yellen, Board of Governors, Chair

James Bullard, St. Louis

Averages:

Eric Rosengren, Boston

Loretta J. Mester, Cleveland

6.28

6.53
7.47
7.76

10

FED SURVEY
December 15, 2015
19.
Overall, how do you expect the path of rate
normalization will end for the U.S. economy?

FED SURVEY

50%

April 30,
44%

45%

40%

35%

33%

30%

25%

20%

15%

10%
10%

5%

5%

5%

3%

0%
Extremely
badly

Somewhat
badly

Neither well
nor badly

CNBC Fed Survey December 15, 2015

Page 21 of 27

Somewhat
well

Extremely
well

Don't
know/unsure

FED SURVEY
December 15, 2015
19.

What is your primary area of interest?

FED SURVEY
April 30,

Currencies
3%

Other
15%

Fixed
Income
13%

Economics
50%

Equities
20%

Comments:
John Augustine, The Huntington National Bank: Six years into
this economic cycle, ZIRP is now penalizing savers more than it is
rewarding borrowers.
Jim Bianco, Bianco Research: No one has successfully gotten off
zero. The Japanese tried in 2006 (hike once and then cut). The ECB
tried in 2010 (hike once and then cut to negative). What the Fed is
about to do is unprecedented.
Peter Boockvar, The Lindsey Group: Unfortunately monetary
policy will be the number one influence on the economy and markets
in 2016 to my extreme dismay, but it is what it is. I put a zero
probability that the Fed's attempt to normalize policy will go
smoothly.

CNBC Fed Survey December 15, 2015

Page 22 of 27

FED SURVEY
December 15, 2015
Lou Brien, DRW Trading Group: The previous rate hike cycle
demonstrated the Fed has little influence over the long end of the
FED
SURVEY
curve. Thus the
10-year
yield reacts to the first derivative of Fed
April
30,
policy, the effect
that
it might have on the economy, particularly
inflation. It is notable that even as the market has high degree of
confidence that a rate hike is coming, the 10-year yield is closer to
2% than it is 2.5% or 3%.
Robert Brusca, Fact and Opinion Economics: The economy has
deteriorated and is deteriorating. Oil is unraveling. There are NO Fed
members talking about waiting. The Fed hikes rates with a low
probability of inflation getting to 2% on its horizon. Most in the
markets want a hike, but the Fed hiking rates in this situation is
undermining itself. Its desire to be data dependent and to have
forward guidance too has resulted in a severe case of Fedzosphrenia.
Thomas Costerg, Standard Chartered Bank: We remain skeptical
that the Fed will undertake a multi-year linear tightening path. Our
forecast is for only two hikes, in December and March; we see then
the Fed pausing in June and September 2016. Total debt is high,
the US economic cycle is mature, the USD is strong, and inflation is
structurally soft. Growth could weaken by end-2016, and growth
risks then could prompt the Fed to ease policy again. We think the
Fed will cut rates in December 2016; by March 2017 the FFTR could
be back at 0-0.25%. We think full QE reinvestment will continue until
at least 2018.
John Donaldson, Haverford Trust Co.: The debate regarding the
Fed is whether a hike is simply a move away from extraordinarily low
rates to less extraordinarily low rates or "a rate hike is a rate hike."
We are in the first camp and believe that this hike is not in the same
league as most past tightening, especially when the impact on longterm rates is likely to be muted.

CNBC Fed Survey December 15, 2015

Page 23 of 27

FED SURVEY
December 15, 2015
Dennis Gartman, The Gartman Letter: In the end we shall see
that it is nonsense that equities and energy prices move downward
SURVEY
in tandem andFED
we shall
eventually understand that increased
April
supplies of crude
oil30,
and nat gas are hugely beneficial; however, in
the interim, as Lord Keynes said, "The markets can remain irrational
far longer than we can remain solvent."
Stuart Hoffman, PNC Financial Services Group: Fed comes out
of self-induced 7 year rate coma by raising the funds rate in
December in response to much improved US economy vital signs.
Art Hogan, Wunderlich Securities: What almost every strategist
that has put out a 2016 outlook is getting wrong about the path of
normalization is that it will not be metronomic, as was the case in
the last cycle. It will be gradual and data dependent. This is not the
FOMC of 2004-2006 when we had 25 basis points increases at every
meeting. The other thing to remember is that 1/3 of active investors
have never seen a rate hike and think it is the end of the world. It is
not.
Timothy Hopper, TIAA-CREF: The Fed disappointed markets by
not raising in September. That mistake won't be repeated at this
meeting. Last week, the ECB disappointed markets by not easing
enough. That mistake won't be repeated either. Look for further
ECB easing during the first half of 2016.
John Kattar, Ardent Asset Advisors: A rate hike looked like a
done deal after the last jobs number, but market volatility, high
yield, and geopolitics have made it a close call. My non-consensus
view is pass in Dec. with a hike (finally) in March.
David Kotok, Cumberland Advisors: All the forces for disinflation
or deflation are public and identified, so the surprise could be that
inflation comes back more quickly than expected and will be more
virulent when it does.
CNBC Fed Survey December 15, 2015
Page 24 of 27

FED SURVEY
December 15, 2015
Subodh Kumar, Subodh Kumar & Associates: A rate increase
program likelyFED
fromSURVEY
the Fed and global growth uncertainty add up to
more volatilityApril
until 30,
mid- 2016. The cost of financial leverage has
already been rising since early 2015. Many present market problems
relate to Wall Street assuming more growth than companies can
deliver without resorting to excess financial engineering. Capital
market recovery, including commodities and more stability in
currencies in second half of 2016, will likely depend on the global
growth outlook for 2017. Fixed income is likely to remain under
pressure and constrain equity valuation.
Guy LeBas, Janney Montgomery Scott: The big question is
whether inflation will emerge, bringing the PCE back to 2%.
Unfortunately, we as an economic society can no longer say what
causes inflation--QE, wages, and the dollar have less than 20%
explanatory power post-recession--so inflation is essentially a
random variable. Either it doesn't emerge and we get 2 rate hikes in
2016 or it does and we get 6 rate hikes. The latter scenario is tough
for intermediate duration bonds in particular.
John Lonski, Moody's: Never before has the Fed initiated a series
of rate hikes amid a high-yield spread above 600 bp, a rising default
rate, flat to lower profits, sluggish business sales, and severe
industrial commodity price deflation.
Donald Luskin, Trend Macrolytics: The Fed is relying entirely on
the ol' time religion of the Phillips Curve to hike rates in the face of
record low inflation, collapsing inflation expectations, a soggy labor
market, and a weakening economy. As usual, a policy error. It will
be quickly reversed, as was Trichet's in 2011.

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FED SURVEY
December 15, 2015
Rob Morgan, Sethi Financial Group: The time is ideal for a Fed
rate hike. Global markets are not gyrating as they were in the fall,
FED to
SURVEY
and the Fed needs
begin gathering ammo (by hiking rates) to
April
30,
combat the next
recession.
Chad Morganlander, Stifel Nicolaus (Washington Crossing
Advisors): The deceleration of global growth (external factors) will
keep the Federal Reserve glide path below expectations for 2016.
Lynn Reaser, Point Loma Nazarene University: A succession of
interest rate hikes could quickly unveil the corners of high leverage
in the U.S. economy and financial markets.
John Ryding, RDQ Economics: The Fed has delayed the beginning
of renormalization and risks having to play catch up in 2016, raising
rates more quickly than the market expects.
Allen Sinai, Decision Economics: Where's the inflation? Inflation
will call the tune for much of what happens in 2016.
Diane Swonk, Mesirow Financial: Yellen is a veteran of the
1990s; she knows the impact a prolonged expansion can have on
living standards in a low inflation environment. She sees a chance to
actually regain much of what was lost to the crisis by overshooting
on unemployment on the downside. This is one of the most powerful
reasons for gradualism.
Peter Tanous, Lynx Investment Advisory: Every taxi driver in NY
knows the Fed will raise rates this month, so it is discounted in the
market. But the rate increase may well mark a major change in
interest rate direction--a change that may reverse the trend of
downward rates that started in 1980. What happens when you
reverse a downward trend of 35 years? No one knows!! But it may
not be very good.

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FED SURVEY
December 15, 2015
Scott Wren, Wells Fargo Investment Institute: Inflation is going
to stay low in 2016 and wage growth will stay very modest.
FED
Earnings growth
willSURVEY
likely be 6% to 7% next year. This cyclical bull
April
30, to run in our opinion. Valuations are not
market has more
room
stretched. Nobody is chasing this market as we sit just 4% below
the all-time record high in the S&P 500. Retail investors are
underinvested in stocks and sitting on too much cash. They have
not been stepping in to buy in any meaningful volume on pullbacks
over the last 5 years. They remain cautious, and, in general, have
largely missed the opportunity presented to them by the big rally off
the March 2009 lows. We continue to believe downside volatility
presents buying opportunities. We want our clients to be optimistic
on the outlook for the stock market in 2016. We want them
stepping in and putting money to work in equities, especially on
downside days and weeks.

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