With the vast amount of information available on the Internet, television and other media, it’s increasingly difficult to tell what’s valuable or worthless, real or bogus.

That’s why the judgment of human editors is more important than ever. Raw news or search engines can’t synthesize disparate data to provide the interpretive analysis you need. That’s my job.

Meanwhile, the anchors on cable news resemble carnival barkers. Their role isn’t to inform; it’s to entertain for the sake of ratings.

For today’s column, I want to sift through the distractions of “infotainment” to focus on the important trends you need to watch. Three pivotal events occupied center stage last week and they’re likely to continue dominating the news cycle in coming days:

• Extreme volatility of oil prices following the drone attack on Saudi Arabia’s oil infrastructure;
• The Federal Reserve’s decision to cut interest rates and what it portends for future monetary policy and the economy; and
• China’s cancellation of trade talks and the worsening of the Sino-American rift.

As the new week gets underway, let’s dissect all three. First, it’s worth noting that stocks hover within about 1% of their all-time highs. The table tells the story:

After three consecutive weeks of gains, stocks took a breather and finished slightly lower last week. Will stocks regain traction or lose steam? The fallout from the following events will provide the key.

1) The Attacks Against Saudi Arabia

The drone missile attacks on vital oil infrastructure in Saudi Arabia created the worst oil supply disruption in history, affecting 6% of the world’s production. Oil prices initially jumped 15%, but gave back some gains and closed the week 6% higher after the Saudis made assurances that the damage could be quickly repaired.

Yemen’s Houthi rebels, who have been at war with the Saudis for nearly five years, claimed responsibility for the September 14 attacks. However, White House officials were quick to blame the drone attacks on the rebels’ chief ally Iran. Washington and Tehran have been engaged in a rhetorical war that could erupt into a shooting war. These tensions are likely to persist into the foreseeable future, generating volatility in the energy markets that spills over into the broader equity markets.

The Saudis claim that the damage wasn’t as extensive as first feared, but you’d expect them to say that. The proof will be in how quickly the kingdom gets its lost production back online. Meanwhile, the supply-and-demand equation had been volatile even before the attacks.

2) The Federal Reserve and Monetary Policy

The U.S. central bank last week lowered its federal funds rate by a quarter point (25 basis points), as an “insurance cut” to offset risks from slowing global growth, trade war turmoil, and the emergence of recessionary signals. And yet, the U.S. economic expansion continues, with mild inflation, a confident consumer, and historically low unemployment.

For clues as the Fed’s further actions this year, turn to this week’s crowded docket of scheduled economic reports (see table below). Jobless claims and consumer spending warrant especially close scrutiny. One of the remaining strengths of the bull market is a confident and free-spending consumer.

The September rate cut was akin to giving a healthy person a dose of cod liver oil, just to be sure. But Wall Street and the White House have been clamoring for deeper cuts, which the Federal Reserve has resisted.

Read This Story: What the “Hawkish Rate Cut” Means for You

The Fed’s reluctance is understandable. Unemployment hovers at 3.7%, the lowest level in 50 years. The country has enjoyed 107 consecutive months of job growth, the longest streak on record. Wages are rising at an average of 3.2% so far this year, the strongest yearly pace in more than a decade.

Too much monetary medicine could kill the patient.

When the Fed initiated rate cuts of 50 basis points in 2001 and 2007, recessions officially began within about two months of the cuts, indicating that the downturns had already been underway before the Fed took action. We could be facing a similar situation, as warnings such as the “inverted yield curve” rear their heads.

Further interest rate cuts won’t guarantee a continuation of the expansion. In fact, they might prove harmful by fueling inflation and leaving the Fed with few tools when the recession eventually hits.

3) The Escalating Trade War

Chinese officials last Friday abruptly canceled a planned trip to visit American farmers and returned to China sooner than scheduled. The move dashed hopes that a trade deal was at hand.

As I’ve repeatedly warned readers, a resolution of the trade conflict before the 2020 election is highly unlikely. Neither President Trump nor Chinese leader Xi Jinping can afford to “blink” and disappoint their respective constituencies. China appears to have adopted a new strategy: drag its feet until Trump is out of office. Beijing is betting that Trump won’t get re-elected. Meanwhile, the tariffs already in place are taking their toll, by raising costs and uncertainty.

According to new customs data reported by the Associated Press, trade activity between the world’s two largest economies plunged in August compared to numbers for the same month last year.

The report states: “Imports of American products to China dropped to $10.3 billion in August, down 22% from the same month last year. Chinese exports to the U.S. also plummeted to $44.4 billion in August, down 16%. China’s trade surplus with the U.S. shrunk to $31.3 billion in August, down $27 billion from a year prior.”

The Investment Takeaways

The confluence of the three trends I’ve just examined should compel you to emphasize defensive sectors (e.g., utilities, real estate, and consumer staples); elevate cash levels (15% makes sense now); and avoid export-dependent multinational industrials.

Among the best bets in the energy patch are U.S.-based refiners. The light, sweet crude that is characteristic of shale oil isn’t a good match for refineries that have invested in heavy, sour processing. The result has been discounted domestic crudes. Certain better-equipped refiners can buy these crudes, process them, and sell them into the export market at higher global market prices.

Also make sure your portfolio contains gold as a hedge. The time to gain exposure to select gold assets is now, before geopolitical tensions get even worse and the investment herd starts screaming buy buy buy! By then, you’ll be buying into a bubble.

Gold has enjoyed a big run-up this year but the yellow metal doesn’t appear close to peaking, as credible analysts project further gold price appreciation.

You should also tap investment themes with sufficient momentum to withstand geopolitical surprises, monetary policy changes, and trade conflict. One such trend currently stands out: the roll-out of “fifth generation” 5G wireless technology.

For our new report on the opportunities in 5G, click here.

Reader Q&A

In response to my Sept. 19 article Trump to Fed: Drop Dead, I received this email:

“As always, I liked John Persinos’ objective analysis, which provides a good picture of the current investment environment. However, it would be even better if John could provide specific advice as to what actions we should take for near and long term investment. Thanks again for an excellent article.” — Michael Y.

Michael, my Monday-Friday column Mind Over Markets is designed to provide a macro “big picture” view of the political, economic, business, and financial trends that affect investments. I provide general trading advice but not specific recommendations.

For specific picks, turn to our premium trading services or the daily “Stocks to Watch” column, in which our chief investment strategists (myself included) provide buy and sell advice for a wide range of assets.

Got any questions? I’m here to help: mailbag@investingdaily.com

John Persinos is the managing editor of Investing Daily and its portfolio of publications.