Dog Days

      As I write this, southern Indiana is suffering through a stifling heat wave. With mid nineties temps and very high humidity, any outside work results in sweat-soaked clothes in just minutes. Another guy who is sweating it out is Jerome Powell, the Chair of the Federal Reserve Open Market Committee. He is being grilled by Congress about monetary policy which directly affects our economy and capital markets including the stock market. Jerome is under pressure by our President to cut interest rates because that might cause stocks to rise which is how the Donald gauges his performance as President. I say "might" because a rate cut may signal to Wall Street that the economy is weaker than thought and could actually cause panic selling, an unintended consequence. Even though the President appoints the Federal Reserve Chairman and the Board of Governors, the Fed is supposed to be independent from any political influence. Trump has recently been bashing Powell in tweets and has even threatened to demote or fire him. When asked what would he do if Trump fired him, Powell answered that he would stay on the job because the President did not have the authority to fire him. Stay tuned because this could get very interesting and messy. Typically interest rate cuts are designed to ward-off recessions or even to soften a financial crisis, neither of which is happening. You can bet that Wall Street traders are hanging on every word of Powell's testimony and placing trades based on their interpretation of his answers to questions. Since I consider myself an investor and not a trader, I will do nothing about today's testimony to Congress. In fact I consider myself to be in a pretty good place. I have lightened-up on some stocks as they rocketed-up in June and built myself a war chest of capital for bargain hunting when a downturn does occur. I have built a fixed income portfolio of CD's that don't have a high return but are safe from market swings. The June brokerage statements just came in the mail yesterday and were surprisingly strong. Another plus is that many brokerages have increased their money market returns to the 2% range which actually generates some return for a change. Looking forward, I am interested in snagging some of the "post IPO" stocks which usually sag after the lock-up period has expired and investor enthusiasm wanes. Just because I missed out on past blockbusters doesn't mean I can't get lucky for once. As for today, I will stay indoors and hope my 25 year old air conditioner keeps working.