The Fed will have to cut to 50-75bps to put any shape in the curve and will likely have to cut to 25-50bps to resteepen the front end and save the Primary Dealers from having to buy Treasuries that foreign banks dump onto them.
Something I have described is the 'LBO Whitehouse's economic model In the LBO model you try and keep debt costs fixed and then lowered while growing revenues over several years to get an equity multiple
Trump has almost got borrowing rates down to negligible levels. While a $1tn plus fiscal deficit is supporting final demand in the economy as the impact of tariffs and the auto sector slowdown ripples through it
In the end whether we get a shallow recession or just a recession scare, I think the real economy in the US and globally rebounds in the second half. If we then see wage inflation pushing up to 4-4.5% against a Fed cowering at 50bps, Powell will then be under mandate pressure to start a hiking cycle even though the economy will be in a state of stagflation
Trump's business track record can be characterised as spending a huge amount upfront, revenues falling short and defaulting when the Fed hikes rates. His MO doesnt seem to have changed much.
I think it is during that stagflationary hiking cycle, that squeezes corporate margins back to normalised levels, that equities crash.
Whats happening now with Coronavirus scare is just a late cycle prelude to it and equities will most likely relief rally in April or May as the warm weather dries the virus out and the economy starts to rebound.