This page has been archived and commenting is disabled.

Quote Of The Day From Credit Suisse: "US Stock Market More Reliable Despite Crashes"

Tyler Durden's picture


Just in case anyone wanted to know what not to say to defend the absolute horrific mess of self-aware vacuum tubes and errant algos, formerly known as "the market", here is a great primer from Credit Suisse's trading strategist Phil Mackintosh.

Bullets summarized by Bloomberg:

  • U.S. Stock Market ‘More Reliable’ Despite Crashes

This one really needs no comment

  • Computers “make it easier” to find outliers in terms of price, volume helping to make the markets “more reliable” now compared to the period before computerized trading

So forget about actual value, just look for millisecond momentum mean reversion patterns out of whack and trade on that. Wait, what about the market being a discounting mechanism? Um, nevermind. Also, what can possibly go wrong with simply trading momentum. Speaking of, has anyone head of JAT Capital lately?

  • 10 worst days in Dow all happened before computerized trading

So there were no computers involved in the "dynamic" hedging involved in Portfolio Insurance and the debacle which became Black Monday? But yes, it was mostly human traders dealing with the epic disaster in the aftermath of computerized Garbage In, Garbage Out models (kinda like those used by every polling Wunderkind nowadays). One can only imagine what would happen if momentum accelerating algos had been involved in 1987...

  • More stocks gapped 1% in 1 minute in the early 2000’s than now, improved as computer use grew

A fine example of spurious correlation, because one can refute that infinitely more stocks gapped from their NBBO to $0 or infinity after 2000, and especially after the adoption of Reg NMS and ATS, both of which completely broke the market.

  • Concluded reaction to trades “much faster than a typical asset manager would most likely be able to move” suggesting“ short term traders do provide value” by adding significant liquidity, transferring risks.

Go ahead and tell that to BATS and its catastrophic IPO... And no, fast trade reaction simply means that mean reversion algos kick in without regard for the actual underlying news. Also the only transfer of risk that takes place is that from collocated boxes to the slower retail platforms which are always left holding the stick. Because so much happens in the 10 nanoseconds after a headline sends a stock to $0 and back. Also, the only value short-term traders provide is churn and chaos in the immediate aftermath of big news. Because otherwise what is the rationale to halt a stock when it is up or down 10%.


  • Notes daily value of U.S. stocks traded of $220b more than double rest of world combined, shows “vote of confidence”

Look up Stockholm Syndrome Phil. Then look up how much money exchanges make from High Frequency Churning, pardon Trading. Finally look up any of the thousand examples caught on Zero Hedge showing quote stuffing, subpennying, flash crashing, internalizing, dark pooling, and last but not least, how HFT has never, repeat never, added to market liquidity (as predicted by us one year ahead of the Flash Crash), when said liquidity can be literally pulled with the pull of power switch out of a socket: the proverbial HFT STOP.

So no, Phil, "despite crashes" the stock market is not "more reliable." Quite the opposite. But please issue more sad, yet entertaining, defense pieces such as this one. All it shows is the desperation with which you and your peers are approaching the wholesale disgust that most people who manage money are now exhibiting toward the complete fraud that the stock market has become. That's ok, though. The upside is one day you, too, will learn a socially beneficial skill, as opposed to finding sub-nanosecond arbitrage opportunities in a market which is only where it is thanks to $14 trillion in monetary injections (and rising at an exponential rate) from the central planners.



- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 11/05/2012 - 15:01 | 2949334 ACP
ACP's picture

Or is it "will crash reliably"?

Mon, 11/05/2012 - 15:24 | 2949404 James_Cole
James_Cole's picture

"The upside is one day you, too, will learn a socially beneficial skill, as opposed to finding sub-nanosecond arbitrage opportunities in a market..."

Bit jealous?

Mon, 11/05/2012 - 16:11 | 2949564 Pladizow
Pladizow's picture

Reliable losses!

Mon, 11/05/2012 - 18:10 | 2949961 franzpick
franzpick's picture

Careful:  Nature abhors a vacuum tube.

Mon, 11/05/2012 - 15:04 | 2949335 Muppet of the U...
Muppet of the Universe's picture

It's still people running those computers...

& as if it needs saying.  There's no way we'd be 1400+ without QE opTwist

& the best response I can think of?  Bots have crashed stocks 100% nearly infinitely faster than any humans.

HFT... adding volume and liquidty, and enough chop to slaughter muppets, since early 2000s.

Mon, 11/05/2012 - 15:07 | 2949351 Muppet of the U...
Muppet of the Universe's picture

Out of curiosity, are there any other sites similar to bloomberg or reuters markets?  but absent of the msm bs? Something akin to zh?

Mon, 11/05/2012 - 19:04 | 2950130 poor fella
poor fella's picture

Gladly I currently do not have the time to go through them, but I've found many interesting articles outlined in the sidebar on the left ("Zero Hedge Reads")... Obvious answer, but I doubt one in 1000 can check them on a regular basis and you might find a good 'second'.

p.s. Do you ask because you too find your self refreshing ZH,  W A I T I N G   for a new article!!?  =D   

Mon, 11/05/2012 - 15:22 | 2949399 SheepDog-One
SheepDog-One's picture

Right, remove all the trillions pumped in so far and halt Twist and QE'z and lets see how rosy things look. These people are whores.

Mon, 11/05/2012 - 15:02 | 2949337 Dr. Engali
Dr. Engali's picture

That makes me feel better. I'm going to rush out and sell my gold to buy stawks right now.

Mon, 11/05/2012 - 16:07 | 2949547 Sancho Ponzi
Sancho Ponzi's picture

Do you think this guy's bright enough to understand he's a tool?

Mon, 11/05/2012 - 20:29 | 2950373 OldPhart
OldPhart's picture

Brightest tool in the scrap pile.

Mon, 11/05/2012 - 15:02 | 2949338 not fat not stupid
not fat not stupid's picture

I recommend re-education camps for the idiot insiders who still don't get it.

Mon, 11/05/2012 - 15:02 | 2949340 Hondo
Hondo's picture

Totally false..........

Mon, 11/05/2012 - 15:07 | 2949346 knukles
knukles's picture




(staring at screen wondering just what to say.... mentally drumming fingers... waiting... waiting... waiting...  what's for lunch?   wondering if anybody really cares anymore?  remembering NYT opinion piece...)


Mon, 11/05/2012 - 15:17 | 2949382 insanelysane
insanelysane's picture

There is "no excuse for inaction,"  Obama said after a brief unscheduled visit to Red Cross headquarters in Washington.  "I want you to cut through red tape; I want you to cut through the bureaucracy. There is no excuse for inaction at this point."


Which means there are excuses for inaction, bureaucracy, and red tape at other points.  Useless rules by a useless government Dem and Repub.

We have a rule, no foreign flag tankers in the harbors.  Oh wait, we can have foreign flagged tankers now.  The crap is all made up with no real reason behind it other than to exercise control.

Mon, 11/05/2012 - 15:28 | 2949417 knukles
knukles's picture

Sure glad he said that to the Red Cross as opposed to his very own charges at FEMA....

Mon, 11/05/2012 - 16:27 | 2949615 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"The crap is all made up with no real reason behind it other than to exercise control."

One more big reason- SHAKEDOWN!

Gotta provide an incentive to get "campaign contributions" flowing!

Mon, 11/05/2012 - 19:59 | 2950304 Parrotile
Parrotile's picture

However seems the "Useless Bureaucracy" was OK when whichever Government "of the People's Choice" (Ha, Ha!) created it though . . . .

Another "Jobs for the Boys" situation - or, - "you taxpayer's dollars hard at work". Doing what, no-one seems to really know . . . . .

Mon, 11/05/2012 - 15:08 | 2949356 CalibratedConfidence
CalibratedConfidence's picture

well done Tyler

Mon, 11/05/2012 - 15:39 | 2949442 resurger
resurger's picture

The last passage is Head Shot!

Mon, 11/05/2012 - 15:12 | 2949360 razorthin
razorthin's picture

This ass now moves to 5th in line behind Bernanke, H. Paulson, Geithner, and Dimon for high treason prosecution.

Mon, 11/05/2012 - 15:26 | 2949411 LongSoupLine
LongSoupLine's picture

wow, so ahead of Corzine, Blankfein, Summers, Rubin, Mozzila, Gensler and most of the SEC and CNBC staff?

Mon, 11/05/2012 - 15:50 | 2949486 razorthin
razorthin's picture  You are correct.  Just a temporal bias.

Mon, 11/05/2012 - 20:02 | 2950314 Parrotile
Parrotile's picture

"Come the Revolution", you're going to need a VERY long wall, or perhaps many shorter walls (so all the "Good and the Great" from previous Administrations have the honour of being first up against "their" bit of wall!)

Mon, 11/05/2012 - 20:31 | 2950380 OldPhart
OldPhart's picture

Every town has at least dozens of light poles.

Mon, 11/05/2012 - 15:11 | 2949364 crusty curmudgeon
crusty curmudgeon's picture

The US is more solvent and creditworthy with all of our debt than when we had a balanced budget.

Mon, 11/05/2012 - 15:13 | 2949367 ziggy59
ziggy59's picture

Tyler, any word on what bix weir wrote here?

DTCC Fraud Cover-up In Progress!


Mon, 11/05/2012 - 15:51 | 2949487 Northeaster
Northeaster's picture

Nothing to see here, especially when your lobbying arm has a bunch of ex-CONgress Members/Insiders.

We are all on the outside looking in and nothing will change that.

Mon, 11/05/2012 - 15:59 | 2949527 NotApplicable
NotApplicable's picture

Well, let's see... one would have to be monumentally stupid to store important papers in a non-watertight, underground vault. Especially papers that are claims on wealth. Claims that it is your entire job to protect, and administer.

Nope, nothing to see here...

As I said last week, Jim Sinclair and friends are the only people in the world safe from the dangers of rehypothetication.

Mon, 11/05/2012 - 15:15 | 2949373 nonclaim
nonclaim's picture

"U.S. Stock Market ‘More Reliable’ Despite Crashes"

May take this was designed to blow fuses on headline scanners.

Mon, 11/05/2012 - 15:58 | 2949519 knukles
knukles's picture

I had a Chevette that was more reliable than this market..
A bud had a Yugo he swore by as well.
And he hated stocks.

Mon, 11/05/2012 - 16:05 | 2949541 TideFighter
TideFighter's picture

My buddy had one too. But, he shortened it to "Vette" when the ladies were around.

It got him laid, but he offered no rides home. He always said he could get laid for

$20, we found out that was GF's cab fair home. 

Mon, 11/05/2012 - 15:15 | 2949374 timbo_em
timbo_em's picture

That guy is hilarious. Not that they are doing anything to stop HFT but maybe the SEC should then encourage more algo-caused crashes/cracks so that the remaining 'market' participiants learn to deal with 10 percent movements within nanoseconds. From Taleb's "Black Swan of Cairo" I learned that the deciders should not try to suppress volatility. So a major crash every fortnight might help to restore confidence.

btw: As a guitar player I don't like it when one compares HFT with tubes.

Mon, 11/05/2012 - 20:06 | 2950325 Parrotile
Parrotile's picture

Nothing quite like the Marshall "valve-sound" is there!

The image looks very much like an ECC88 too.

Mon, 11/05/2012 - 15:17 | 2949386 pods
pods's picture

More reliable?  LOL.

I guess it depends on what metrics you use?

It certainly is not a market for buyers and sellers to determine the value of a company, and a place where you may "invest" your saved capital into a business looking for dividends on said capital.

Now if they mean a better place to show proof that your MMT works, then yes I would agree that injections of liquidity and everyone and their brother rent seeking on their every depreciating saved or borrowed credit money before the music stops are giving sheep a false sense of survival for the moment.

I guess it all depends on what you definition of "market" is?


Mon, 11/05/2012 - 16:06 | 2949545 NotApplicable
NotApplicable's picture

Well, for one thing, dead people are fairly reliable.

Maybe that's what this CS flunkee is talking about? Perhaps Phil is getting all philosophical in absence of markets to analyze?

Mon, 11/05/2012 - 15:19 | 2949390 Scalaris
Scalaris's picture

Reliability despite crashes, like having your g-spot hit despite being raped. 

Mon, 11/05/2012 - 15:20 | 2949392 ebworthen
ebworthen's picture


Keep trying; three generations have lost trust in the markets and the entire system.

TPTB are going to need a lot of SOMA to restore any semblance of trust in the casino.

Mon, 11/05/2012 - 16:08 | 2949552 NotApplicable
NotApplicable's picture

Trust? No, no, no.

The words you're looking for are "captured funds," a.k.a. "your 401."

Mon, 11/05/2012 - 15:20 | 2949394 SheepDog-One
SheepDog-One's picture


Mon, 11/05/2012 - 15:45 | 2949395 Yen Cross
Yen Cross's picture

 U.S. stock market more reliable because of computerized trading... Now you can see yourself, in the comfort of your home office, taking it up the ass , " Real Time"...     (l)ô  > Ben Dover.

Mon, 11/05/2012 - 15:23 | 2949401 insanelysane
insanelysane's picture

The circuit breakers halt trading now so of course you can't crash but you can't trade during that time either.

Mon, 11/05/2012 - 15:27 | 2949413 SheepDog-One
SheepDog-One's picture

This is just the type of over-the-top bullshit spewed right before the wheels fall off.

Mon, 11/05/2012 - 15:55 | 2949507 gjp
gjp's picture

Add to that Dalio's treatise on self-sufficiency that doesn't even mention resources or balance of trade.  I'm still speechless that this passes as intelligent analysis in some circles.

Mon, 11/05/2012 - 15:30 | 2949423 monopoly
monopoly's picture

It goes to show how upside-down our system is. How can this idiot spew forth such bullshit and go associate with his clients and smile. Beyond words. What a jack ass.

Mon, 11/05/2012 - 16:12 | 2949568 NotApplicable
NotApplicable's picture

I would assume that these type of technical sophists are segregated from the rank and file sales force in an effort to ensure their delusions are not breached by any of the commoners.

Well, that or they hit the bottle first thing upon waking.

Either way the bubble d.b.a "The Facade of Integrity" must be protected at all costs!

Mon, 11/05/2012 - 15:34 | 2949424 monopoly
monopoly's picture

Double post. Sorry

Mon, 11/05/2012 - 15:31 | 2949426 monopoly
monopoly's picture

This would have been a great day to close the market for lack of interest. What a waste of electricity today on Wall Street.

Mon, 11/05/2012 - 15:36 | 2949434 Bunga Bunga
Bunga Bunga's picture

Agreed, computers create "wealth" until we are unable to read out this "wealth" from the hard drives because of power loss.

Mon, 11/05/2012 - 15:42 | 2949451 The Master
The Master's picture

This was an Onion article, right?

Tue, 11/06/2012 - 07:32 | 2951203 tradewithdave
tradewithdave's picture

I remember a wise old man who always told me... A heart attack that doesn't kill you makes you stronger.

I miss that old guy.


Mon, 11/05/2012 - 15:44 | 2949459 Vince Clortho
Vince Clortho's picture

A fluff piece to convince the simple minded oatmeal brains out there that the new "markets" are superior to the old markets that allowed human beings to participate.

Mon, 11/05/2012 - 15:46 | 2949468 debtor of last ...
debtor of last resort's picture

"socially beneficial skill" Hmmm, let me think,


Wonder what's in the box.

Mon, 11/05/2012 - 15:47 | 2949476 Conax
Conax's picture

Whenever they start that 'liquidity' shit you know the BS is flowing. "Market making' is another fraud flag.

Mon, 11/05/2012 - 15:48 | 2949481 leadingmarkets
leadingmarkets's picture

Article title sounds like a oxy moron! thats why I stick to trading stocks from these guys who deliver great picks

Mon, 11/05/2012 - 15:53 | 2949496 luna_man
luna_man's picture



Way to give it to them MY MAIN MAN!!...We ain't all ameteurs!!


chalk another up for MY MAIN my back

Mon, 11/05/2012 - 15:55 | 2949504 TideFighter
TideFighter's picture

I just called Waddel and Reed and they said, "Fuck you Phil!"

Mon, 11/05/2012 - 15:57 | 2949515 Yen Cross
Yen Cross's picture

 The banksters are getting really desperate again. They have ramped every levered financial instrument to infinity, and can't find  any suckers so they can bolt out the exit door! F..king scum, all of them.

 I can't wait to see all the banksters faces when they are stuck holding their bags of recycled ass wipes, when everything vaporizes.

Mon, 11/05/2012 - 16:16 | 2949579 NotApplicable
NotApplicable's picture

Desperate? Hardly. They've only got to keep the ruse up for one more day.


Que the Mayans!

Mon, 11/05/2012 - 16:16 | 2949539 Anasteus
Anasteus's picture

It's, however, important to spread such absurdities among people gradually eroding the trust in the institutions until the point of no return is inconspicuously reached. The lunatic bankers and politicians fully trapped in greed and superiority will not notice the point coming, and if even so they'll be clueless as to what to do because the solution is far beyond the realm of their understanding and willingness to act appropriately. Simply put, in the end they'll screw it up to an irreversible extent, perhaps even with the best intentions in mind.

Mon, 11/05/2012 - 16:15 | 2949570 epwpixieq-1
epwpixieq-1's picture

I am standing in defence of the Vacuum Tubes (VT)!

Please stop abusing the VT images, and put the real abusers, the Transistor (T).

For one, it is certain, VT are a lot more enduring and interesting devices then the T, and not to mention at all the reliability issues.

And not last, VT are analogue devices, especially compared with the T.

You know there are difference, so please be precise. I know, T do not have a cool image as the VT, but hey we do not want to distort the truth, do we?

Mon, 11/05/2012 - 16:31 | 2949634 Conax
Conax's picture

I greened you up for the defense of our beloved 12AX7s and other melodical audio tubes.

That said, the transistor isn't evil either, it's the CPU multiprocessors that do the dirty work.

But we need them to read ZH, so what's a mother to do? We can't throw the baby out with the bankwankers.

Mon, 11/05/2012 - 20:18 | 2950357 Parrotile
Parrotile's picture

And there's that special class of vacuum tubes without which Nuclear War would be so much more difficult - many of which seemed to find their way (illegally) to a certain Israel, "to help with their Defence Programmes"

Mon, 11/05/2012 - 16:42 | 2949694 blunderdog
blunderdog's picture

Maybe I'm just being contrarian, but I get it.  I agree the market is totally "more reliable" these days. 

If the purpose of the stock market has traditionally been to help the wealthy con the less wealthy out of their money, I'd say the takeover with computers has helped tremendously.

Wed, 11/07/2012 - 11:51 | 2956202 holyworld
holyworld's picture

Surely, we can say that it was an impact of having an election for the US president. According to Micheal Lombardi's personal notes published at http://www.profitconfidential.... , it was sure that there would be an impact as we seen in the interview and session between Obama and Rooney.

Fri, 12/07/2012 - 23:28 | 3044852 cgagw
cgagw's picture

Common enemy of service providers is the outdated perception that enterprise IT has to remain internal, real Cheap Oakley Sunglasses are safty Even though service providers have been succeeding in winning that business, he says, 90 percent of enterprise IT budgets are still spent on internal IT.

Do NOT follow this link or you will be banned from the site!