Most reasonable people are ardent supporters of reducing and eliminating crime and lawlessness. That is why on its face it may make good sense to send in the National Guard to assist the police in the District of Columbia in their effort to reduce crime. According to officials, a plan is being developed to work on the task in a coordinated approach. Many questions remain about how this will be accomplished. Will Guard members wear body cams? Who makes an arrest first? If a Guard member is on his own, will he be able to make an arrest or will he need to call for back up from the police. The practical day to day considerations are endless.
Having the Guard as a presence in the District may provide some deterrence but it also appears to be overbearing. The justification for sending the Guard into the District is permitted and justified under the “special” relationship with the federal level. Despite improvement in the crime statistics over the years, there remains considerable room for improvement.
One question is who pays for all of this elevated attention. Is there enough provided for in the federal budget for this kind of action? On the District’s side, who will be covering all of the overtime that will be required to elicit and to execute a coordinated plan? You will recall that Congress held up approval of the District’s budget in the last cycle. The District has suggested that the police ranks need to be replenished to former levels. That would be a good start.
The District has worked hard to obtain higher credit ratings and acceptance in the market. Will this one aspect of federal control lead to other avenues? Will the District’s budget process become more labored? We await further developments.
Calls for the Fed to ease are ongoing. Most pundits now believe there will be action in this direction at the September meeting. Inflation remains stubbornly above the 2% Fed target. Higher tariffs have just been put into effect. However, the negotiations with China have been extended for another 90 days. This extension provides some incentive for earlier holiday shopping to take place.
The municipal market continues to be experiencing elevated supply. The higher supply has not changed the positive placement of the paper. We anticipate these conditions will continue, but the Fall is typically a time of even higher issuance.
Equity markets continue to reach higher highs. Signs are this trend will continue to run barring some unforeseen events. Peace efforts in the Ukraine war may also bring some additional benefits if realized after the meeting on Friday. Crypto is also reaching new highs and is gaining some more acceptance. It will be interesting to see if investors cash out of crypto will it lead to more capital gains tax receipts for states where that applies in addition to traditional capital gains.
Bonds continue to be attractive at these levels and provide a modicum of stability in portfolios. Keen interest in the paper remains focused on the shorter end. As investors become more confident about the Fed’s future course of action, there should be more interest further out on the curve.
John Hallacy
John Hallacy Consulting LLC
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