When Non-News Becomes Fiat News

Every morning, we run The Narrative Machine on the past 24 hours worth of financial media to find the most on-narrative (i.e. interconnected and central) stories in financial media. It’s not a list of best articles or articles we think are most interesting … often far from it. But for whatever reason these are articles that are representative of some chord that has been struck in Narrative-world. And whenever we think there’s a story behind the narrative connectivity of an article … we write about it. That’s The Zeitgeist. Our narrative analysis of the day’s financial media in bite-size form.

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Image result for hong kong residential real estate

Want to know what Common Knowledge about the paramount importance of the China Trade War looks like in financial media?

Hong Kong Clashes Put Brakes on Property Boom [Dow Jones]

The headline is ominous.

“Hong Kong’s formidable property market is straining, as protest pressures add to those created by an escalating U.S.-China trade spat and slowing global growth.”

OK, strong lede. I can tell this one’s gonna be juicy.

“The city has been hit by a “perfect storm” of trade tensions and spiraling protester-police clashes, Wharf Real Estate Investment Co. Chairman Stephen Ng told media earlier this month. He said sales at the company’s two flagship malls, Times Square and Harbour City, had suffered.”

It’s happening, people!

“The impact on the residential sector has been smaller. At the city’s top 10 private housing estates, homeowners sold 19 apartments in the first four weekends of August, four more than in the same period a year earlier, Centaline Property Agency data shows. The company said sales picked up during the most recent weekend, aided by anticipation of persistently low interest rates and after some homeowners reduced prices.”

“The realtor’s Centa-City Leading index, a gauge of used home prices, has fallen by 1.1% in seven weeks, after hitting a record high in late June.”

Wait, what?

“Still, Louis Chan Wing-kit, Centaline’s Asia-Pacific vice chairman, said many prospective buyers had canceled viewing tours, as protests disrupted transport and dented investor sentiment. Weekends are prime time for both viewings and the biggest protests.”

This…this is a story about canceled open houses?

Look, Lord knows that we’ve all learned that under the right circumstances, any drop in real estate prices can be a big deal (something something Gaussian copula). There are times when a 1.1% drop in some real estate markets would shock the world. But home prices in a market like Hong Kong behave like risky assets, not just in their natural volatility but in their beta to junior securities in related markets. And with all that’s going on in that neck of the woods right now? Yeah, maybe another 2016 is in store. Or another 2017. No idea.

I also know that a market slowing down after years of roaring growth is a story.

But this piece doesn’t sit at the top of the Zeitgeist because it seeks to tell the story of a market that has flattened after an almost uninterrupted decade of growth. It sits at the top of the Zeitgeist because it strains to find powerful connections to as many negative events as possible when the connections – a couple tough weekends for open houses, really? – are banal, at best. It could serve as a thesaurus for negative media coverage of an issue. Rattled. Outbreak. Diminish. Dented sentiment. Perfect storm. Positives are dismissed as “much-hyped.” It closes with a fiat tell – good ol’ nonetheless – which leads to an almost reluctant closing.

“Nonetheless, analysts don’t expect too severe a pullback. Supply remains tight, and a currency peg to the U.S. dollar means local interest rates track those in the U.S., which helps keep mortgage costs down.”

“Mr. Chan at Centaline, and Will Chu, property analyst at CGS-CIMB Securities, both said they expect home prices to fall in the second half, bringing price growth for the whole year to about zero.”

The point isn’t that there is nothing interesting going on in Hong Kong real estate from an investment or social perspective. The point is that when the narrative is that China Trade War is the only thing that matters, our consumption of media tells every story almost completely through the lens of that narrative, with all of its baggage and all of its dire implications.

If you feel your information being drawn toward the gravity of China Trade War language, simply knowing – as my childhood taught me – is half the battle. Consider how it affects your thinking. Consider how it might affect the thinking of others. Clear Eyes.


  1. “DOW Up 10 Points; Trump Hailed As Stable Genius!
    Powell forced out; Trump thinking of appointing Kushner to Fed”

  2. Avatar for rguinn rguinn says:

    Hah, that too! Felt like like we’d given the Fed and Trump narrative machine enough ink lately.

Continue the discussion at the Epsilon Theory Forum


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