How Not to Run In An Uncertain Economic Environment

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HOUSTON—Without a doubt, the US economy is sending mixed messages about its health. On one hand, the job market remains robust despite September’s lackluster numbers. (US payrolls only added 136,000 jobs, underperforming economists’ expectations, but the unemployment rate fell to fell to 3.5%, a 50-year low). On the other hand, US manufacturing has sunk into a recession, according to the Federal Reserve, which reports that output has shrunk in the past two quarters this year. Then there is the yield curve, which has been inverting over the past year. However on Friday one portion of it—the spread between three-month and 10-year US Treasury bonds—turned positive last week for the first time since the summer.

Companies are turning to various strategies to stay on top of these trends. In some cases investors have decided to hoard their dry powder to wait for distressed buying opportunities. Most investors, though, are keeping a hand in the market but modifying their strategies.