• by Wayne Friedman , Staff Writer, September 11, 2019

The media can move financial markets over a long period of time. But how about the attribution value of one person, perhaps the one with the biggest bullhorn in the U.S.

JPMorgan Chase & Co. has come up with what it calls the Volfefe Index -- a mash-up of the word volatility and a May 2017 reference to Donald Trump’s misspelled word in a tweet: “Despite the constant negative press covfefe.” (Coverage, perhaps?)

There already exists an actual volatility index, where a high number denotes marketplace uncertainly, a lower number posits more stability.

Created by the Chicago Board Options Exchange (CBOE), the Volatility Index, or VIX, is a real-time market index that represents the market's expectation of 30-day, forward-looking volatility.

Of course, JPMorgan isn’t alone in following the effects of Trump tweets on the market. Bank of America Merrill Lynch said in a note that days during which Trump tweets relatively frequently, it tends to see negative stock returns of nine basis points on average. Fewer presidential tweets tend to see positive returns of five basis points on average.

JPMorgan says Trump tweets on average 10 times a day since the start of 2016 -- 10,000 tweets since the inauguration. It has tracked specific words, not specific presidential tweets: This includes "China," "billion," "products," “Democrats” and “great.”

JPMorgan says the frequency of market-moving tweets from Trump "ballooned" in August, causing big market swings. Looking at the Dow Jones Industrials, for example, the index closed at 26,583 on August 1, 2019. It moved down to 25,717 on August 4, then was up to 26,525 on August 21. It was down 25,628 on August 22, then up to 26,835 on Sept 5.

One CNBC analyst believes the more Trump tweets, the more investors can be “worked up.” When that happens, they might do some out-the-box investor behavior -- which doesn't end well. Another CNBC analyst says Trump's tweets have less and less impact on the market.

It comes down to a couple simple conclusions. Markets don’t like uncertainty, and a media platform in the wrong hands can make things happen. Every good businessman knows that. Well, most of them.