The on-again, off-again trade war is…on again.

The “Phase I” trade proposal between the U.S. and China, announced last Friday, initially cheered investors and sent stocks soaring. But now China is throwing cold water on the deal.

Chinese state media on Monday contradicted the notion that a trade truce is imminent. President Xi Jinping has indicated that he wants more talks before his country signs any Phase I deal as touted by President Trump. All three main U.S. stock indices closed in the red yesterday.

Below, I’ll highlight investment opportunities that are immune from the trade war. As Q3 earnings reports start to roll in, these companies should outperform on the bottom line.

U.S. futures edged higher Tuesday in pre-market trading, as attention turned to the start of third-quarter earnings season, which is expected to be tough slogging for companies exposed to the trade war. That said, this week’s heavy slate of earnings reports got off to an auspicious start.

Before the opening bell today, JPMorgan Chase (NYSE: JPM), the largest U.S. bank by assets, posted third-quarter earnings that surpassed expectations. The bank reported strength across nearly all of its activities. JPM’s earnings per share came in at $2.68, versus Wall Street’s expectations of $2.34.

Nonetheless, China continues to cast a long shadow over the global economy and corporate profitability. Analysts are increasingly skeptical that Phase I amounts to anything substantive. Existing tariffs remain in place and they’re taking a toll on economic growth.

The research firm Statista released yesterday its new “Global Economic Outlook Score (GEO),” a periodic survey of business experts around the world. The latest results aren’t pretty.

Within the next six months, global economic development is expected to significantly decline. The worst outlook is for Europe, with a GEO score of -22% (see chart).

A major headwind for the global economy and corporate earnings is the trade war. Chinese trade data released Monday revealed further declines in the country’s exports in September, largely because of tariffs.

Third-quarter corporate earnings releases get underway this week and despite a strong start overall, expectations are dismal. According to the latest consensus estimate, the S&P 500 is projected to report a decline in earnings of -4.6% for the third quarter. If this projection comes to pass, it would mark the third consecutive quarter of negative earnings growth.

Another headwind is Brexit. A British exit (aka Brexit) is what will occur now that the people of Britain have voted for their country to leave the European Union. The “Leave” campaign won an in-out referendum of EU membership which took place in June 2016. The vote in favor of Brexit shocked expectations and threw British politics into turmoil.

This week will be a busy one for Tory Prime Minister Boris Johnson, the British Parliament, the EU, and by extension global investors. Time is running out for the UK and the EU to secure a Brexit deal. Johnson has until Saturday, October 19 to secure a compromise, or he’ll be compelled to write Brussels and request yet another Brexit extension.

A European Council Summit will begin in Brussels this Thursday, which Johnson and his team will attend. The UK and EU remain far apart and the clock is ticking. A “hard” Brexit (one without a deal in place) would see Britain crashing out of the EU.

Many economists predict that a hard Brexit would be a disaster for Britain and the EU, and would harm growth in America and the rest of the world.

October 19, dubbed “Super Saturday” by the British press, will witness either a parliamentary session to vote on a deal agreed with the EU or a meeting to hammer out the next steps without one.

The electrifying gains of utilities…

Against this global backdrop, how should you trade now? The utilities sector boasts considerable investment appeal. As the British government remains gridlocked over Brexit and the world’s two largest economies pursue a destructive trade war, you should focus on long-term investment trends that are inoculated from geopolitical risks. Utilities fit the bill.

Utilities confer growth, safety and income, in good times or bad. No matter what happens with Brexit or the Sino-American trade war, people will still need electricity. Because their revenue is domestic-oriented, utilities are a buffer against overseas turmoil. Utilities stocks represent classic havens during the late stage of the economic cycle.

According to Morningstar data, investors pulled roughly $60 billion from stock funds in the third quarter, representing the largest equity outflow since 2009. It’s a clear sign that investors are getting skittish. However, over the past 12 months, the utilities sector has been among the market’s top performers, outpacing Information Technology by a margin of three-to-one.

As corporate America this week launches what’s expected to be a disappointing earnings season, the utilities sector is projected to post the best year-over-year earnings growth for the third quarter (see chart).

Therein lies a dilemma, though. The utilities sector’s average price-to-earnings ratio hovers at record highs, far above the peaks posted in the past at similar stages in the economic cycle. The high valuation of utility stocks is due in large part to low interest rates and the hunt of income investors for decent yield.

Yes, you should rotate toward defensive plays. But you shouldn’t overpay for them. The good news is, we’ve found quality utility stocks that are reasonably priced and still have plenty of room to run. To find the best buys in the utility sector, click here for our special “dividend map.”

Marijuana’s unstoppable momentum…

Another investment theme you should consider is marijuana legalization and commercialization.

According to a recent study by Grand View Research, the global legal marijuana market should reach $66.3 billion in sales by 2025, for a compound annual growth rate during the forecast period of nearly 24%. I think those numbers, although impressive, are conservative. Certain areas of the marijuana industry face an even bigger future, with exponential year-over-year gains of triple digits.

As with utilities, pot stocks are immune from trade war and Brexit. Increasing numbers of U.S. states have legalized marijuana for recreational and/or medical use. In many states, you can walk into a legal marijuana dispensary and buy pot as easily as you can buy a pack of gum at the local CVS.

Marijuana remains illegal at the federal level, but the political winds are in Mary Jane’s favor. It’s only a matter of time before federal prohibition of pot is lifted and when that happens, the best-positioned pot stocks will explode on the upside.

To discover under-the-radar plays on marijuana that are poised for market-beating gains, click here now.

John Persinos is the managing editor of Investing Daily and the premium trading service, Utility Forecaster. You can reach him at: mailbag@investingdaily.com