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         Daily Blog - Tiger Software

                                 July 22, 2007

    The JFK Years and The Stock Market
Excerpts from our forthcoming book on the
                            US Stock Market: 1915-2010

William Schmidt,     - Tiger Software's Creator
      (C) 2007 William Schmidt, Ph. D.  - All Rights Reserved. 

      No reproductions of this blog or quoting from it
      without explicit written consent by its author is permitted.

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      to william_schmidt@hotmail.com


The JFK Years and The Stock Market

                    A Democratic President seems likely given Bush's unpopular war and the massive
            deficits and public resentments it has created.  We might want to consider how JFK
            affected the stock market since he was a northern Democrat who took over from a
            Republican, Eisenhower, who had been Presidient for 8 years, 1952-1960. This was
            a time when  it was widely held in  business circles that a Democrat would be far less
            favorable for business, particulalry "Big business".
                    Mark Twain said: "History doesn't repeat itself, but it sure does rhyme."

                                             Presidential Election year of 1960                                 
                                      (Theodore White's The Making of A President)

                    Here is the Tiger chart of the year 1960.  Technical analysis usually wins out over
            heeding "raw emotions".  That was as true in 1850 as it is today.  The DJI for the first
            eight months held above the DJI's 600 support level.  During this time the Tiger's
            Accumulation Indes was mostly negative, showing that big money selling and "distribution"

                                            -- Peerless Chart of DJI for 1960 --
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                                         Honeymoon: 1961: Camelot and Wall Street

                     The stock market rose for most of 1961, with the exception of a mild July-September
           correction which Peerless would have called.
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                                                JFK and Business

                Kennedy prior to his election tended not to consult business even when he appointed
            the heads of federal regulatory agencies. As Senator he had opposed the Taft-Hartley law.
            As a millionaire, he was less impressed with other millionaires. When he became President
            he wrote:
                               "Taken individually, labor leaders are often mediocre and egotistical,
                           but labor as a whole generally adopts intelligent positions on important problems.
                           On the other hand, businessmen are often individually enlightened but collectively
                           hopeless in the field of national policy."
                  --   Source: www.signs-of-the-times.org/signs/editorials/signs20061120_JohnFKennedyandtheTitans.php --

                                           JFK versus the Steel Trust

                The US News and World Report opined that "the President's action point inevitably
           to a federal dictatorship over business..."  The press and the legions of dissatisfied business
           people neglected that he appointed Republicans to the key positions of Treasury Secretary
           and Federal Reserve Chairman.   But in August of 1961 JFK was warned by his head
           economic advisor, Walter Heller, that a steel strike or a sharp rise in steel prices or wages
           would "upset the (economic) applecart all by itself."  So, he sought to pressure both the steel
           workers' union and steel industry leaders not to increase wages or prices by 2.5%.  He believed
           he had their agreement.   On March 31, 1962, the union announced that thet it had agreed
           to a new contract that would have provided less than a 2.5% increase in wages and benefits. 
           But on April 10th, the CEO of US Steel,  Roger Blough appeared at the White House and
           told JFK that  his company was going to raise its prices on average about 3.5% in June.  
           JFK was furious at being double-crossed. 

Within 24 hours Kennedy launched investigations by the FTC and Justice Department
           into collusion and price rigging by the steel companies."  To further show the steel industries
           he meant business, JFK began to stop Pentagon contracts from going to the steel industry.  
           These actions frighted Wall Street.

                Long before, this happened, savvy technicians who were watching the DJI-30 (which then
           included US Steel) must have noticed the bearish head and shoulders pattern the DJI was
           tracing out.  They should have seen that the readings from our Tiger Internal strength indicators
           were much weaker on the pattern's right shoulder in March.  The "neckline", the pattern's key
           support, 680, was broken on April 30th. But even before then, Tiger users would have turned
           bearish, simply by recognizing the price pattern.  In addition, TigerSoft's OBV Line and IPA Line
           (not shown here) showed support breakdowns on April 3rd and April 11th.  The timely Sell S17
           signals warned of serious divergences between apprarent price action and internal strength.
           Selling and selling short were clearly call for here.

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                As you can see from above, Wall Street soon swooned at JFK's attack on US Steel.
           The DJI on April 10th   was at  695.  Bethlehem Steel soon announced similar price hikes. 
           On April 11th, JFK released a press statement:
                            "The simultaneous and identical actions of U.S. Steel and other
                          leading steel corporations, increasing steel prices by some six
                         dollars a ton, constitute a wholly unjustifiable and irresponsible
                         defiance of the public interest.   In this serious hour in our nation's history,
                         when we are confronted with grave crises in Berlin and Southeast Asia,
                         when we are devoting our energies to economic recovery and stability,
                         when we are asking Reservists to leave their homes and families
                         for months on end and servicemen to risk their lives and asking
                         union members to hold down their wage requests; at a time when
                         restraint and sacrifice are being asked of every citizen, the
                         American people will find it hard, as I do, to accept a situation in
                         which a tiny handful of steel executives whose pursuit of private
                         power and profit exceeds their sense of public responsibility can
                         show such utter contempt for the interests of one hundred eighty-
                         five million Americans."
          Soon FBI agents were at the homes and offices of stell company executives, seeking
          information that would build a case for price-fixing.  Two days later, Inland Steel and
          Kaiser Steel announced that they would not be raising prices and Bethlehem Steel
          reversed itself.  On April 13th, US Steel rescinded its price hikes. Milton Friedman
          said this was the action of a "police state" and the LA Times likened JFK to Mussolini.
          Big business considered they had a natural right to setting the prices for their goods,
          except, presumably in war-time. (See

                    It is likely that much of the market's decline in this period had more to due with
         the gathering US-USSR confrontation over Cuban missles.      

                   Cuban Missle Crisis
             There's no need to recall the details of this scary period, when it seems the world stood
       overlooking the abyss of nuclear anilation. The stock market exactly mirrored the fears.
                         April 17, 1961   Backed by the U.S., a group of Cuban exiles invades
                   Cuba at the Bay of Pigs in an attempt to trigger an anti-Castro rebellion.
                   The invasion fails and more than a thousand Cuban rebels are captured by
                   Castro's forces.

                        June 3-4  JFK and Khrushchev 
                        July 27, 1962  
Castro announces that Cuba is taking measures that
                  would make any direct U.S. attack on
Cuba the equivalent of a world war.
                  He claims that the U.S.S.R. has invested greatly in helping defend his country.
                  August 10, 1962   CIA Director John McCone sends a memo to Kennedy
                  expressing his belief that Soviet medium-range ballistic missiles (MRBMs)
                  will be deployed in
                      August 31, 1962 
Senator Kenneth Keating tells the Senate that there is
                 evidence of Soviet missile installations in
Cuba . Keating urges Kennedy
                 to take action.
                 September 11, 1962   In a speech to the UN, Soviet Foreign Minister
                 Andrei Gromyko warns that an American attack on
Cuba could mean
                 war with the Soviet Union.
                 September 11, 1962  Kennedy orders a U-2 reconnaissance flight over
                 western Cuba, delayed by bad weather until the 14th.
                 October 10, 1962  Senator Keating charges that six intermediate-range
                 ballistic missile bases are being constructed in Cuba.
October 14, 1962   A U-2 flying over western Cuba discovers missile
                 sites. Photographs obtained by this flight provide hard evidence that
                 Soviets have missiles in
October 18, 1962   Gromyko and Kennedy meet for two hours. Gromyko
                 assures Kennedy that Soviet aid to
Cuba has been only for the "defensive
                 capabilities of
Cuba "
                 October 20, 1962  Kennedy's Press Secretary announces that the
                 President is canceling the remainder of his campaign trip because of an
                 "upper respiratory infection." Kennedy meets with his advisors and
                 orders a defensive quarantine instituted as soon as possible. The full
                 operation is reviewed and approved, and the President's television address
                 is scheduled for the next evening.
                 October 21, 1962  Kennedy is told by General Maxwell Taylor that an
                 air strike could not guarantee to destroy all Soviet missiles in
                 Kennedy decides on a quarantine of
Cuba for the time being.  Another U-2
                 flight that day reveals bombers and Migs being rapidly assembled and
                 cruise missile sites being built on Cuba's northern shore.
                 October 22, 1962 Congressional leaders assemble at the White House.
                 They express support, but some seek a more aggressive response...
                 The President addresses the nation in a televised speech, announcing
                 the presence of offensive missile sites in Cuba... US military forces go to
                 DEFCON 3....U.S. base at Guantanamo Bay is reinforced by Marines.
October 22, 1962  U.S. ships take up position along the quarantine line.
                 This is when market reversed course and turned up.

                 October 24, 1962  Soviet ships en route to Cuba with questionable cargo
                 either slow down or reverse their course except for one....US Military forces
                 go to DEFCON 2 the highest ever in U.S. history.
                 October 25, 1962  Kennedy sends a letter to Khrushchev laying the
                 responsibility for the crisis on the Soviet Union. White House discusses a
                 proposal to withdraw U.S. missiles from Turkey in exchange for the
                 withdrawal of Soviet missiles in Cuba.
October 25, 1962  Aleksandr Fomin, who was known to be the KGB
                 station chief in Washington, requests a meeting with ABC News
                 correspondent John Scali. Fomin proposes the dismantling of Soviet bases
                 under U.N. supervision in exchange for a public pledge from the U.S. not to
                 invade Cuba. Khrushchev sends another letter to Kennedy proposing
                 removing his missiles if Kennedy would publicly announce never to invade Cuba.
                 October 27, 1962 Khrushchev proposes a public trade of Soviet missiles
                 in Cuba for U.S. missile in Turkey. Meanwhile an American U-2 is shot down
                over Cuba killing the pilot...  A U-2 accidentally strays into Soviet airspace
                near Alaska nearly being intercepted by Soviet fighters... Soviet ambassador
                Dobrynin and Robert Kennedy meet and discuss the price of removing the missiles
                from Cuba.  Kennedy writes Khrushchev a letter stating that he will make a
                statement that the U.S. will not invade Cuba if Khrushchev removes the missiles
                from Cuba.
October 28, 1962  Khrushchev announces over Radio Moscow that he has
                agreed to remove the missiles from Cuba.  

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Once the Cuban Missle scare was over, the market roared ahead.  Stocks were in "strong hands".  And the
        market rose steadily until the mid-1965 correction..  A new bear market was not started until after the February
        top in 1996.  Not even the assassination of JFK held the market back.  

- JFK Assassination
            Would you have panicked when President Kennedy was assassinated?  Not a good idea.
     The next day the market was up strongly.  Of course, much of American business was holtile
     to Kennedy.  Still, at first it seemed Oswald was a CIA assassin.

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   There's more coming in my book on the stock market since 1915 using the perspective of Peerless
Stock Market Timing.  Stay tuned.













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