JFK-Trump S&P500 Analog – Five Basis Points On Day 328

Via Global Macro Monitor,

After 328 trading days since election day, the Trump S&P500 sits right on top of the JFK S&P500.  That is the performance of the index, 328 trading days after the election day of each president, is less than five basis points within one another.

Rather stunning, don’t you think?

Similar Volatility Shock

Recall in our earlier posts (see here and here), there have been three other massive volatility shocks since 1950,  similar to the one the S&P500 just experienced.

1) 1955: Ike’s heart attack; 

2) 1962:  the “Kennedy slide” or JFK bear market; and

3) 1987:  the “crash” bear market, which lasted only 38 days.

We threw out Ike’s heart attack as it was not a prelude to a bear market.  The S&P500 recovered shortly after the sharp Monday sell-off after President Eisenhower had a heart attack on the 8th hole at Cherry Hills Country Club the prior Saturday afternoon.

Though the current S&P500 has the same theme, set-up, and backdrop as the JFK post-election rally and bear market in 1961-62,  the fundamentals drivers of the current correction are very similar to those of the 1987 rout (see here).

The run up in stocks after JFK’s election was spooked by rising inflationary pressures and the president jawboning “big steel” as he felt the executives broke an agreement with the administration and labor unions,

The pact, with ten of the nation’s 11 steel companies, called for an increase in fringe benefits worth 10 cents an hour in 1962, but no wage hikes that year. Then-AFL-CIO President George Meany said that in the pact, the union “settled on a wage increase figure somewhat less than the Steelworkers thought they would get.”

Kennedy praised the contract as “obviously non-inflationary” and said both the USW and the steel firms showed “industrial statesmanship of the highest order.” The agreement also implicitly said the companies would not raise prices, as that would be inflationary.

But on April 10, Roger Blough, CEO of U.S. Steel, the largest of the firms, with 25% of the market, met Kennedy in the Oval Office and told him the company was immediately raising prices by $6 a ton – and that other steel companies would follow. Six did. The 3.5% hike enraged the president. What he said in public was biting – but he was even more caustic in private.

In an April 11, 1962 press conference, Kennedy called the price hikes “a wholly unjustifiable and irresponsible defiance of the public interest.” He criticized “a tiny handful of steel executives whose pursuit of power and profit exceeds their sense of public responsibility.” The execs had “utter contempt” for the U.S., Kennedy said.

In private, Kennedy added: “My father always told me that all businessmen were sons of bitches, but I never believed it until now.” The line quickly became public. –  People’s World

“Sons of bitches” coming from the mouth of a president.  Where have we heard that before?

President Kennedy’s rant against steel came about a month into the S&P’s big downdraft.

True Analog Tracker?

If the analog continues to track, the S&P500 should rally around 1.27 percent in the next ten trading days from today’s close before rolling over hard, suffering a decline of 26.37 percent in the next 73 trading days, bottoming in late June.  The index would then bounce 14.26 percent from the June low the next 41 days before rolling over again to retest the low in late October.  Interesting how October is the month of market bottoms.

Of course, they will not track perfectly,  but they are thus far rhyming with each other on fairly consistent basis.

Nevertheless,  328 days after election day, with both markets experiencing similar volatility shocks – the JFK shock coming a little later than the Trump S&P 500 shock – the fact both S&Ps are performing within five basis points of each other is simply amazing.

It’s Right here, Right Now for the analog in the next ten trading days. The Navarro waterfall beckons.

It is starting to get interesting.  The interns now in charge may be about to experience their baptism by fire.

Stay tuned.