The Kissinger Market

The stock market so often seems to be ruled by arcane forces that its more imaginative speculators have tried to correlate its gyrations with all sorts of noneconomic indicators: sunspot activity, hemline lengths, the 13th century "Fibonacci sequence" of numbers, or even the messages flashed on a Jehovah's Witnesses sign in Brooklyn that is visible from Wall Street's towers.* The newest indicator, and an unusually reliable one, is the itinerary of Henry Kissinger. When President Nixon's personal agent jets to Peking or Paris for talks about Viet Nam, stock prices often shoot up for a day or two--although they usually drop back again as soon as he returns without a peace treaty.

On at least eight occasions this year, excitement over the jet-propelled professor's whereabouts has given prices a sharp if brief boost. Some samples: on Jan. 27, the Dow Jones industrial average jumped ten points after a Kissinger news conference disclosed some details of his previously secret trips to Paris to confer with North Vietnamese negotiators. On May 3, the Dow index climbed more than eight points in the first two hours of trading on the mere rumor that Kissinger was in Paris again (then the Dow tumbled more than ten points the same day when the White House denied that he was wrapping up a deal with Hanoi). The average rose ten points when Kissinger was in Peking, on June 20 and 21, though it dropped back by the time he left on the 23rd; on Aug. 14, the Dow industrials rose nine points when Kissinger surfaced in Paris once more. Two weeks ago, the market barely reacted to news that Kissinger had gone to Paris yet again--but when the White House announced that he would stay an extra day to confer with the North Vietnamese at greater length, stocks took off on a rally that added nearly 20 points to the Dow in two days.

Kissinger himself disclaims any market expertise, and adds: "If I can affect an institution that I do not understand, I shudder to think of what I'd do to things that I do understand." In fact, Kissinger knows quite well that the reaction to his trips is not at all mysterious. Investors realize that peace in Viet Nam would end a drain of money and would free the economy from a powerful inflationary force; it would also set off a stock market boom. And one clue to how close or far peace may be lies in the peregrinations of Henry Kissinger.

* The Fibonacci sequence goes 0, 1, 1. 2, 3, 5, 8, 13, 21, etc. with each number from the third on derived by adding the two previous numbers. Some market watchers insist that stock-price cycles follow Fibonacci numbers, and are composed, say, of five bull and three bear movements, with each movement subdivided into eight, 1 3 or 2 1 minor swings. The Jehovah's Witnesses sign within the past year has flashed "Paradise Soon" just before a nice market rally, and "Dead Will Rise" immediately before prices of some long-depressed stocks began going back up.

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