Markets signal that both the US and China have blundered in a minefield, wrote Nicholas Colas, co-founder of DataTrek Research, in a note to clients.
How low must the shares go?
The Fed may be reluctant to act unless the situation worsens.
A decline to this level will constitute a fully borne bear market with a 22% decline from S & P 500 & # 39; full-time height. It will also be 19% during Tuesday's proximity.
In other words, the Fed should not be counted for help until investors have priced in a recession.
"I don't think the Fed will respond unless we see a very big downturn," says Mustafa Sagun, Principal Global Equities chief investment officer, who manages more than $ 350 billion. "I see a small probability of a fall this year."
Zero Percentage of a Rate Increase
However, the futures market says otherwise.
Investors see only a 30% chance of the Fed keeping the line and keeping interest rates stable in 2019, according to CME. chance that the Fed even raises prices only once.
Boston Fed President Eric Rosengren, a voter on the Fed policy, said he "doesn't necessarily" expect a price cut. However, he left the door open for one.  "If the impact of the tariffs – and whatever financial market reaction to these charges is – causes more of a slowdown," Rosengren told Reuters, "then we have the tools available to us, including lower interest rates. "
Esther George, an inflation hawk and president of the Kansas City Fed, acknowledged on Tuesday that the tariff struggle is a threat to the otherwise solid US economy. But George discovered the latest concerns about lowering inflation.