JP Morgan's New 'Volfefe Index' Tracks the Impact Donald Trump's Tweets Have on the Markets

During the recent stock market dive, the Dow Jones Industrial Average bounced back slightly. Banks, investment firms and market analysts track fluctuations in financial markets to capture trends like weather, mergers and international relations.

In light of recent events, JP Morgan added a new market indicator: the Volfefe Index. It tracks how Twitter posts including false claims by President Donald Trump manipulate markets.

Trump recently came under fire for the market bounceback created by a lie about trade talks resuming with China. In other cases the Dow tumbled because of Trump tweets.

JP Morgan Chase—which uses the JP Morgan brand for their investment banking, asset management, private banking, private wealth management and treasury services divisions—announced the new Volfefe Index with a detailed explanation for its necessity.

"The subject of these tweets has increasingly turned toward market-moving topics, most prominently trade and monetary policy."
"And we find strong evidence that tweets have increasingly moved US rates markets immediately after publication."

JP Morgan developed the index name by combining "volatility" and an infamous Trump tweet of the nonsense word "covfefe." An analysis of over 14,000 Trump tweets identified trends to create datasets for the index.

JP Morgan/JPMorgan Chase

The financial management firm added:

"We can use this dataset to perform a supervised machine learning exercise—specifically we can train a classifier to infer how likely each tweet is to move markets."

"A broad swath of assets from single-name stocks to macro products have found their price dynamics increasingly beholden to a handful of tweets from the commander in chief."

People again cited the possibility of illegal market manipulation by the President.

Although the President did have some defenders.

But they received pushback.

While many questioned legality, market traders cried foul over playing with their livelihood.

As of Tuesday, September 10 it is 419 days until the 2020 presidential election.

Not sure how the stock market works? The book The Beginner Investor: A Beginner's guide to Stock Market Investing is available here.


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