Well, it’s Monday morning and I am still not sure what happened in Ukraine on Friday morning. The stock market sold-off early on conflicting reports, only to recover a lot of ground in the afternoon, but then, unfortunately, finish in the red, (save for NASDAQ). On one hand, the action points to growing jitters in the market that is probably the result of the age of the rally, and worries about future catalysts. If there was a serious incident in which Russia (officially) entered Ukraine, the Dow could give up 500 to 1,000 points in a heartbeat. However, I still think cooler heads will prevail.

Speaking of Military Action

A lot is being said about the militarization of local police departments. I think it is the kind of debate that can only happen in a nation where crime has come down dramatically within the past several decades.  Similar to freedom, I think Americans take it for granted. Nevertheless, the issue is becoming a lightning rod with economic ramifications.

Background

In 1991, the National Defense Authorization Act which allows the transfer of surplus military gear to local police departments, was passed. Initially, it included things used in both the Cold War and the first Iraq War. In 1997, it expanded to include the anti-terrorism mission. Some of the high-profile equipment includes the following:

• 435 Ambush- protected armored vehicles (M-RAPs)
• 435 Armored vehicles
• 533 Aircraft, planes and helicopters

Local police have also received:

• 93,763 Machine guns or rifles
• 180,000 Magazines (no ammo)

However, only 5% of the reassigned items are weapons…. other tools included items such as 44,900 night-vision equipment.

In the wake of the botched deployment of tear gas and armored vehicles in Ferguson, Missouri, the militarization of the police will be used for political fundraisers and campaign ads. I think it has been mischaracterized, along with various headlines that tanks were pointed at the crowds, especially as there were no tanks. Moreover, I think it is part of an orchestrated war on police, but it has touched a nerve and it makes one question, “What’s the money angle?” So far, the program has $5.0 billion worth of stuff.

The Real Issue

We are in the last days of summer, which means we start to think about the fall, going back to school, and contemplate a better second half for the economy. By now, teenagers are antsy from being restless for so long, that in some cases, it can become a powder keg. However, do not get it twisted, the biggest problem with teenagers and young adults is a lack of opportunity. This is a combination of jobs and a lack of skills.

Right now, the employment-to-population ratio (which measures the percentage of working-age Americans actually working) for 15 to 24 years of age, is near its lowest reading ever. In fact, the number is not far from where it was in the Middle East, when the Arab Spring swept the area. I have always said that I think there would have been more summer riots, if those in the worse economic conditions were not giving President Obama a free pass. Over the weekend, there was a lot of criticism of "government,” but none about the Commander in Chief.

At some point, there will have to be opportunities for everyone, including young Americans.  These jobs cannot be artificial, although we need a more robust summer jobs program, but the real solution is an economy that is so great, that it lifts all ships and all spirits.

Today’s Session

It seems that Friday’s reversal is sticking as the major indices are gapping higher this morning. Overnight, the global equity markets performed well with good news coming from Europe and Asia. Things appear to be cooling down in the Russia and Ukraine area. The two countries are working with the Eurpoean Union to draft up a ceasefire. Also, growing hope in the market are talks of a new stimulus package in China. The country recently saw housing prices fall in a majority of its major cities, so it is trying to quickly remedy the situation.

We do not expect much economic data to move the market. There were only a couple of companies that reported earnings this morning (and not too many more will report after the market close), but more economic data will be released  later this week. All in all, no Russian news is good news. The Family Dollar/Dollar Tree saga has taken another twist, and the street loves bidding wars. The market is poised to open higher… now, let’s see if it holds- I think it will.

Company	Ticker	EPS (Actual)	EPS (Est)	EPS 1-Year Ago	Rev (Actual $M)	Rev (Est $M)	Rev Y/Y %
China Mobile Games	GMGE	0.27	0.22	-	$            274.60	$         260.98	281.4%
Fuel Systems Solutions	FSYS	-0.05	0.04	0.13	$              17.85	$           89.53	-30.9%
*JinkoSolar Holdings	JKS	0.92	0.76	0.56	$            392.10	$         390.51	-

 

Comments

Yes, Only if along with the equipment they are given training on how to appropriately integrate it into operations. Criminals are not limited to police revolvers. With the breakdown in the border, and with more terrorist activity in this country expected (don't fool yourself into thinking we are safe), why not be prepared. No sense in closing the barn door after the cows have left, so to speak. Patrick on 8/18/2014 8:25:33 AM

I have no problem with local police having the equipment but we should probably make sure they have adequate training on how/when to use it. Jay on 8/18/2014 8:57:49 AM

locals are getting too military and not law-enforcement agencies are getting too military. Dept of Ed doesn't need swat teams, but I digress from the question of local. sheila on 8/18/2014 10:05:24 AM

a police state is not a free state! military tactics and equipment is designed for fighting invaders NOT for our own people! this is not to say mob justice is to be condoned steve galli on 8/18/2014 10:16:50 AM

Radical Islam is our greatest danger, in spite of Obama's misplaced thinking. They don't horse around, maybe they need this equiptment, why not.....but we are becoming to militarized, just like in Germany in the mid 3Os.... tom wayne on 8/18/2014 10:29:28 AM

As a former Police Officer, I say give the police as much equipment that gives them the advantage as possible. Most "law abiding" citizens never see the use of the equipment. Only the "bad guys" complain. Marv Evans on 8/18/2014 10:35:26 AM

The rioting is a result of the ever increasing FEAR used to control and manage us! the unemployed, non producers without incentive or HOPE, recipients of entitlement programs that foster dependency, are caught up in the mass hysteria and chaos! why would any police officer put themself in such an outa controlled environment? Like watching a forest fire burn itself out: houses, critters and the forest burns sadly until it fritters out! Lesley on 8/18/2014 10:43:45 AM

Yes, but only with proper training. It's unfortunately normal for a segment of the population to not trust the police in general but they are our only defense against against the mounting threat imminent from the border fiasco. Jonathan Perry on 8/18/2014 11:05:55 AM

This surplus is transforming Police departments into para-military combat units.. Denny Thompson on 8/18/2014 11:08:16 AM

Thw presence of this equipment is not the problem, how it is used is the problem. Used properly it is effective murray lieber on 8/18/2014 11:10:00 AM

There may be individual cases here it would be appropriate. An example might be along the southern border for the border patrol or other well trained officers along that border. The National Guard might be another. Lewis W. Gloss on 8/18/2014 11:19:41 AM

perhaps, at the outset, hind sight 20-20, the K-9 unit shows up, demand order, and when the situation escalates.....send one dog......one rioter goes to hospital...and protocol continues! Sends a message! Lesley on 8/18/2014 11:55:24 AM

By the by, the police have everything they need to serve, protect! The law, weapons, dogs, horses...THE LAW! How bout we get out of their way and let them do their job? WE HAVE ENOUGH LAWS! USE THEM! Laws are supposed to assist, help, protect....like the rules of golf. when understood, they assist......everyone! Lesley on 8/18/2014 12:02:40 PM

The local police need to be perceived as part of the community, not an occupying military force in order to effectively get community cooperation with crime prevention. James Philipp on 8/18/2014 12:48:52 PM

It's better for surplus military equipment to go to police than, for example, ISIS. The problem is in the training and in identifying who is a threat and who need protection. Some threats to public order appear so savage and brutish that only greater force will stop them. Patricia Flynn on 8/18/2014 3:02:48 PM

Police have a right to protect themselves. Police have families too. barbara on 8/18/2014 4:16:51 PM

Better the American police forces get the surplus equipment than give to most of our so-called allies who don't give us support when we need it, ala the mid-east or it finds its way into the hands of people trying to kill innocents in the mid-east. chuck on 8/18/2014 7:28:20 PM

Should be given to the states national guard with the states authorities accepting responsibility for their use. Bob Register on 8/19/2014 10:28:53 AM

Really!!!! But no ammunition?? So that now the police can ride into town on Panzers and see the bad guys in the dark---and then taser them!!! I say go long on Taser. You might need all this as long as you have Al Sharpton and Jesse Jackson making a living on inciting riots. It's just so ridiculous. By the way was the trnsfer of military goods charged to another shady accounting deal by this administration?? barbara rhea on 8/19/2014 11:06:05 AM

Mark Setyn has a very good essay on this subject, with which I heartily agree...go to: http://www.steynonline.com/6524/cigars-but-not-close Ed Hanley on 8/19/2014 1:35:02 PM

Proper training on military equipment should be required prior to distribution. Shannon Jones on 8/20/2014 7:17:36 PM

To many "almost military units" being established. Freeman Taylor on 8/22/2014 12:14:48 PM

Charles, my concern isn't with whether the police have access to excess military equipment but rather the mentality that is beginning to be evident within many policing departments. There appears to be developing an "us" against "them" mentality. One thing Americans have a problem with is this word safety. We suffer under the illusion that police somehow make us safe or safer. They do to a point. Let's make it clear, There is no such thing as safety. It is a figment of our imagination. Ask the folks in the inner city. We can lose our freedoms as fast as we can lose our "safety". What we are seeing, in our culture, is the formation of a quasi police state with quasi military police department. As in any profession there are folks that do not belong in that profession. That holds even more weight when a person is given power and authority over another by virtue of their job. Doug Doug on 8/23/2014 8:53:12 AM

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