JFK-Trump S&P500 Analog – It’s Showtime!

After 363 trading days since election day the JFK and Trump S&P500 are only 1.52 percent apart in terms of price performance.  Baffling, to say the least.

The Kennedy bull run peaked 274 trading days after the November 7, 1960 election rising 31.81 percent topping on December 12, 1961.   The Trump Bump rose 34.77 percent over 306 trading days, peaking January 26, 2018.

The major factor, other than the symmetric political cycle, why  both markets have tracked so well is because of the similar large large runs in such a short period of time – in other words, technicals.    Speculative behavior repeats itself as human nature is timeless even if machines program such behavior and search for similar historic patterns that mimic such behavior.

As the analog illustrates it is now time for the S&P to break lower.   Today,  Day 363, marked the swing high in 1962 and the beginning of a precipitous drop that took the S&P500 down 23.72 percent before bottoming on June 26, 1962.

If the analog is a true tracker — not daily correlated but both indices move together relatively closely in a similar time and direction space — the market should break in the next few days or week.

The catalyst?  Maybe higher interest rates and inflation fears.

JFK Presidential Papers of the 1962 Bear Market

We have sifted through some of President Kennedy’s briefing memos with respect to the 1962 bear market, which are available online (see here).   We thought you would find the following three interesting and very relevant.

The first is from JFK’s economic adviser, John Kenneth Galbraith (JKG) who lists several reasons for the bear market, mainly market psychology and the government’s anti-inflationary policies.  Recall Galbraith wrote a seminal book on the 1929 market crash.  .

The second is from McGeorge Bundy,  Special Assistant to the President for National Security, urging the President not to panic after the 6.68 percent flash crash on May 28, 1962.    The market decline didn’t warrant the White House’s attention until the May flash crash.

Finally, the third memo is the last three pages of a briefing sent to the President from Walter Heller‘s Council of Economic Advisers (CEA) listing several macro reasons for the market slump.  All very similar to our current macro issues:  steel and commodity prices;  regulatory issues; and a balance of payments deficits leading to fears of a falling dollar.

JKG

McGeorge Bundy

Heller CEA