Before I get to the twin topics of China and third-quarter corporate earnings, a quick note about the “big casino” that is Wall Street.

News reports recently surfaced that a shadowy group of futures traders may have generated $3.5 billion in profits off stock plays timed to White House statements about the trade war and economy. Members of the House of Representatives last Friday urged federal regulators to investigate possible insider trading.

Is anyone surprised? I’m shocked, shocked that gambling is going on in Casablanca.

These accusations of insider trading are further evidence that Wall Street is often rigged against individual investors. But Investing Daily strives to tilt the odds back in your favor. Our team of investment strategists are committed to giving you honest and objective investment advice. For us, making you money is Job One.

And despite volatility and growing uncertainties, the investment landscape remains ripe for making money. But you must be aware of the risks. Two major risks right now are a sputtering global economy and negative projected growth for third-quarter earnings.

Let’s first look at the global growth engine of China, a country that plays a pivotal role in corporate profitability.

The National Bureau of Statistics of China last Friday released numbers indicating that the world’s second-largest economy continues to slow. In the third quarter of 2019, the country’s gross domestic product (GDP) grew by 6.0%, down from the 6.2% posted in the previous quarter. Most countries would be envious of that growth rate, but China is the locomotive of the global economy and its current growth trajectory is the lowest in 27 years (see chart).

Tightening credit, sluggish domestic demand and the tit-for-tat tariff war with the United States are contributing to the slowdown in China. As third-quarter operating results come pouring in, it’s worth remembering that many corporations depend on Chinese demand to meet their earnings and revenue targets.

Most earnings reports so far have exceeded expectations, defying predictions of negative profit growth for the quarter. As of market close on October 18, with 15% of companies in the S&P 500 reporting actual Q3 results, 84% are reporting actual earnings per share above estimates.

That said, in earnings calls with analysts, corporate managers increasingly cite the Sino-American trade war as a drag on operating results.

In recent days we’ve witnessed phony truces in the trade war that temporarily drive up stocks, but when more closely examined these trade “breakthroughs” are exposed as PR exercises to placate investors. This cause-and-effect, whereby tweets move markets, has generated considerable volatility.

Follow my four rules: Tune out social media; ignore the partisan hacks on financial television; learn to recognize propaganda; and stick to the hard data.

China’s GDP report weighed on markets Friday, with the Dow Jones Industrial Average closing with a loss of 255.68 points (-0.95%), the S&P 500 down 11.75 (-0.39%), and the tech-heavy Nasdaq down 67.31 (-0.83%).

Pressing on the Dow were the steep declines of two index components, aerospace manufacturing giant Boeing (NYSE: BA) and health services conglomerate Johnson & Johnson (NYSE: JNJ). Reports of managerial malfeasance are afflicting both companies.

Internal messages released last week show that Boeing staff knew in advance of problems that turned deadly with its 737 Max airplane. Johnson & Johnson last week recalled baby powder that contained asbestos. For both companies, it’s time to lawyer-up.

The three main U.S. stock indices closed the week Friday on a mixed note but they remain higher year-to-date (see table).

During the week ahead, 126 S&P 500 companies, including 12 Dow 30 components, are scheduled to report results for the third quarter.

As of today, the blended earnings decline for the third quarter is -4.7%. Blended combines actual results for companies that have reported and estimated results for companies that have yet to report.

Positive earnings surprises reported by companies in the health care and financials sectors were offset by downward revisions to estimates for companies in the beleaguered energy sector.

We’re already in an official “earnings recession,” which is defined as two consecutive quarters of negative earnings growth (Q1 and Q2). If the earnings recession deepens, it’d difficult to see how stocks can maintain their lofty valuations.

The forward 12-month price-to-earnings (P/E) ratio of the S&P 500 is currently 17.0, higher than the 10-year average of 14.6. The cyclically adjusted price-to-earnings (CAPE) ratio currently reads 29.4, compared to the median of 15.7.

For now, the bull market continues. But amid this disconnect between valuations and earnings growth, it’s doubtful that the momentum can last. Especially troubling are signs that the consumer is getting cautious.

Robust household spending has been the pillar of growth during the decade-long economic expansion, accounting for 70% of U.S. GDP. Last week new data showed that a key indicator of consumer confidence, retail sales, declined for the first time in seven months, falling 0.3% in September. The decline was widespread.

Read This Story: Bull Market at Risk as Consumers Get Stingy

However, you can still find reasonably valued stocks with plenty of upside ahead. One trend with sustainable, multi-year momentum is the global implementation of 5G (“fifth generation”) wireless technology.

As the following chart shows, global 5G smartphone subscriptions are projected to soar over the next five years.

Geopolitical risk combined with excessive valuations should prompt you to invest in companies that are involved in game-changing technologies. 5G fits the bill. For details on the investment opportunities in 5G, click here for our latest white paper.

5G will facilitate the Internet of Things (IoT) by allowing several interconnected electronic devices and machines to communicate with each other instantaneously at ultra-fast speeds.

IoT is giving birth to driver-less cars, self-calibrating medical devices, and smart homes, among other things. IoT also automates the delivery of services and billing, supply chains, and warehouses.

You don’t have to be an insider to make money in the stock market. Armed with the right data and guidance, you can steadily build wealth. And we’re here to guide you, every step of the way.

John Persinos is the managing editor of Investing Daily. You can reach him at: mailbag@investingdaily.com