With equities down about 19% from its February peak as of March 9, economists at Vanguard believe the correction has pushed stocks well into “the range of fair value.” That doesn’t mean they couldn’t keep falling further, according to senior economist Andrew Patterson.

The giant mutual fund and ETF complex says that, at present, fair value on the S&P 500 lies somewhere between 2,600 and 3,300. It closed Monday at 2,746, well below the 2,950 mid-point of its range.

Of course, equity prices could fall below the bottom end of its fair value range, especially if the news gets a lot worse. A Vanguard official adds that its measure of fair value can change as yields, inflation and inflation expectations change. For all of 2020, the S&P 500 is down about 15%.

Much of what happens next revolves around the timeframe and duration required to contain the coronavirus. In the short term, the news cycle is likely to get worse.

But using China’s experience with the disease as a predictive yardstick, Patterson thinks that the virus could start heading into the rearview mirror in April, probably late in the month. If that happens, it’s likely the U.S. and most of the rest of the world can avert a global recession.

“If it doesn’t happen until late May or June,” Patterson said, the odds of a global recession will become more elevated. The IMF defines a global recession as global GDP growth of 2.5% or less.

If virus outbreaks continue into May or June, there could be a mild global recession along the lines of 2001, Patterson continued. Over the next two months, the response of policymakers will be critical for markets.

“We’re not here to dictate policy,” he added. However, if markets perceive an ineffectual approach from Washington, D.C., and other governments around the world, the crisis in confidence could get significantly worse.

The good news is that the U.S. economy has recovered from a bout of softness last summer. The February employment report, with 275,000 jobs added last month, was an upside surprise to most economists.

While everyone expect the virus to cause a slowdown in the next few months, employers are unlikely to start laying workers off, except in the energy and travel industries. The cost of replacing them in a tight labor market is simply too expensive. Moreover, many economist think a V-shaped rebound in the second half is likely when pentup demand surges after the virus issues are ultimately controlled.

In the bond market, Patterson acknowledged there is a possibility of negative interest rates on longer-maturity U.S. Treasurys. However, they likely would be the result of market forces, not central bankers at the Fed.

If one takes a scan of asset classes, most are reacting in the way one would expect. Investors with “diversified portfolios are holding up” a lot better than many who hold concentrated positions. Not surprisingly, “we’ve seen high yield [credit] spreads blow out.”