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Pro Analysis

Trump like Kennedy? Why market comparisons to 1962 are spooky


John F. Kennedy making a speech in 1962
Central Press | Getty Images
John F. Kennedy making a speech in 1962

Sandler O'Neill analysts just put out an amazing statistic in a note to clients:

"In 1Q17-to-date, realized volatility of the S&P 500 (calculated as: (intraday high - intraday low) / ((the intraday high + intraday low) / 2))) has averaged 5.37, the lowest quarterly level since 1962."

The news that the markets are posting their lowest volatility numbers since 1962 is significant enough. But there's something about that specific year, and the crazy things that happened between Wall Street and Washington in 1962, that should really set off some alarm bells.

On paper, 1962 should have been a roaring full-year rally for stocks. The U.S. GDP averaged 8 percent growth, yes 8 percent, for most of the year. The nation was right in the middle of the peaceful period in between the Korean and Vietnam wars. And technical advancements thanks to the burgeoning space program were becoming more evident in corporate America.

But despite that one quarter of record-low volatility, Wall Street actually spent almost all of 1962 in freefall. The sell-off began in late 1961, but it picked up downward steam in the new year. And then President John F. Kennedy did something that made things much worse: He spooked the Street with an out-of-character tantrum against one of America's biggest corporations.