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WORLD UNDER THE GUN - By Charles Payne

Question of the Day

Do you agree with my libertarian friends that local police should not be given surplus military equipment? If you want to elaborate on the answer, which isn't cut-and-dry, please send your email to charles.payne@wstreet.com

· Yes

· No

Click here to vote and let us know what you think

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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 -
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