Bob Dylan infamously sang "The Times They Are a-Changin.'" As detailed yesterday, floor traders are quickly disappearing from the New York Stock Exchange. However, one thing remains constant: when markets get volatile and sell off, complaints about computer trading and algos always appear to pop up.
Back in December, with the S&P 500 down 10% from the highest level ever, Omega Advisors founder Leon Cooperman appeared on CNBC to plead the SEC to investigate computer trading for causing "Wild West" with markets. He said, “I think your next guest ought to be somebody from the SEC to explain why they have sat back calmly, quietly, without saying anything and allowing these algorithmic, trend-following models to wreak havoc with what has, up to now, been the best capital market in the world."
Markets found a bottom a couple of weeks later following Steve Mnuchin's infamous call to the PPT. As algos bid up stocks for the next few months, the hatred for computer trading dissipated. All was well again on Wall Street.
Then on March 4, after the S&P 500 had gained nearly 20% from the December low, stocks had a hiccup and indices reversed early gains to finish marginally lower. Jim Cramer had seen enough, blasting "mindless sell programs" as the culprit.
As always, the five-day dip was quickly bought and the S&P 500 ran up another 11% into the end of July to fresh all-time highs. Once again, the calls for the SEC to investigate computer trading disappeared, as did any blame on "mindless buy programs" that bid up stocks on every Fed and trade deal headline.
So today, with markets sitting about 5% below the all-time highs set in late July, an “aghast” Cramer had once again seen enough, this time asking, “Why do they have to wreck our markets?” While blasting "pajama traders," wondering "if it was a huge, huge seller who was so wrong," he asked, “why don’t they just go work for NASA?"
So while computer trading isn't likely to disappear anytime soon, it's equally likely this dip will once again be bought. In doing so, the hatred and calls for computer trading to be investigated will disappear until the next 1% dip. Despite it being harder than ever to get a job on Wall Street right now, it's unlikely the algo programmers will go work for NASA anytime soon, as the most in-demand jobs are in technology and operations.