At 10:00 this morning, the United States will officially impose a blockade on all maritime traffic entering and leaving Iranian ports.

It’s a tense moment after negotiations failed over the weekend to produce an end to the Iran Conflict.

Oil is surging on this development, and the stock market is under pressure. But the jump in oil and pressure on the stock market are in check, which suggests there is still a belief that a resolution could happen sooner rather than later. 

This latest wrinkle in the conflict takes me back to the so-called “Kennedy Slide” and “flash crash” of 1962.

The slide began in December 1961, the crash happened on May 28, 1962, and was described in Life Magazine:

 It was the worst day of losses for the stock market since Black Monday, October 28, 1929.

There were and still are lots of theories about why the market sold off, but most agree it came down to rolling emotions after more than a decade of gains.

In fact, after it took a decade to break even from the Crash of 29 the stock market was seen as a safe and steady bet.

Kennedy would remark at a press conference and in a separate radio and television interview that the market was inflated, trading at a PE ratio of 23. But everything else including the economy was on sound footing.

Cuban Missile Crisis

The market hit bottom in June 1962, but the rebound was beginning to wobble again when the Cuban Missile Crisis unfolded, armed with an abundance of evidence of Soviet Union sites for medium-range ballistic missiles and intermediate-range ballistic missiles. On October 22, President Kennedy ordered a quarantine of Cuba.

Essentially the same as a blockade but legally distinct.

Tensions mounted for days, and Kennedy told his team on October 26 that an attack on Cuba would be needed to remove the missiles, but he gave diplomacy a little more time. After more saber-rattling, Nikita Khrushchev issued a public statement on October 28th that the Soviets would dismantle and remove missiles from Cuba.

The nation breathed a sigh of relief, and so did the stock market, which made a new high a few months later. We are going to be okay.