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Fed Causes Art Auction Binge
Eli Broad ---“No one wants paper money — they want art.”
I know where all those Wall Street bonuses went: contemporary art. The latest auctions from Christie's, Sotheby's, and Phillips de Pury were for the most part blockbuster sales where the works of living and dead Contemporary artists reached new highs.
These art auction houses exceeded all of their estimates on sales this week. Tuesday night Christie's sold a mind altering $231.9 million. On Wednesday evening Sotheby's brought in $190 million at their auction. Then Thursday night, Phillips de Pury, the most interesting auction, brought in $37.9 million. Each house exceeded their pre-auction sales estimates.
Let me digress a minute on the economics here.
If bankers like Goldman Sachs, JP Morgan, Citigroup, and Bank of America have a full quarter of "perfect" trading days, then the huge profits generated find their way into the pockets of those who achieved this investing miracle. But, as readers of The Daily Capitalist know, this was no miracle. It was a gift from the Fed to these bankers.
The Fed has created the opportunity of the new decade, a sure thing carry trade. Borrow money from the Fed at next to zero interest rate cost, and reinvest in bonds elsewhere and make a killing. Don't get me wrong; I am sure this is not as easy as it sounds. But ... I mean is there some super-secret high-powered trading formula that has achieved these returns? I don't think so.
For every buyer, as we well know, there is a seller. The crash fell on some harder than others:
The Phillips' sale was a court ordered sale of the collection of CNET co-founder, Halsey Minor. Minor found himself owing $21.6 million delinquent loan to ML Private Finance L.L.C., an affiliate of Bank of America’s Merrill Lynch. While the sale grossed $37.9 million, there were other collections included in the sale, so it's hard to know from the article if Mr. Minor's creditors were paid. I'll guess that they were. From the NYT article:
Mr. Minor’s collecting taste reflected many of the most popular figures of the past decade. The star of the sale was “Nurse in Hollywood #4, 2004,” one of Richard Prince’s “naughty nurse” paintings, which had been owned at one point by Steven A. Cohen, the hedge fund billionaire. The painting, which had been estimated to bring $5 million to $7 million, went for $6.4 million to a telephone bidder. It was the most expensive work of the evening. One of Mr. Prince’s “joke” paintings — “The Chatterbox Hotel,” from 1990, was estimated at $800,000 to $1.2 million. Another telephone bidder bought the painting for $750,000 or $902,500 with Phillips’s fees.
Mr. Minor owned many paintings by Ed Ruscha, including “Angry Because It’s Plaster, Not Milk,” a 1965 canvas of a colorful bird hovering over a glass of milk that looks as though it is about to spill. Three bidders wanted the painting, which was expected to fetch $2 million to $3 million and sold to Deborah McCleod of the Gagosian Gallery in Los Angeles for $3.2 million.
$6.4 million
It gets better. The Christie's $231.9 million sale included the collection of author Micheal Chrichton who died in 2008. In a ground breaking price for Jasper Johns, he's still alive, his "Flag" painting of the U.S. flag went for $28.6 million, second highest price ever paid for a living artist.
$28.6 million
The Crichton sale included pieces by David Hockney, Roy Lichtenstein and Robert Rauschenberg.
Another big seller was “Studio Painting,” one of Rauschenberg’s “Combines,” a term the artist coined for works in which he used castoff objects like rubber tires, flatware or furniture. This painting, executed in 1960-61, is made up of two canvases with a rope, a sandbag and a pulley. The work, which was estimated at $6 million to $9 million, was bought for $11 million by an unidentified telephone bidder. ...
$11 million
Of the 79 works up for sale, only 5 failed to sell. The evening totaled $231.9 million, above the high $207.4 million estimate. (Final prices include the buyer’s commission to Christie’s: 25 percent of the first $50,000, 20 percent of the next $50,000 to $1 million, and 12 percent of the rest. Estimates do not reflect commissions.) ...
Whether it was the magic of the Crichton name or the art that was on offer, Christie’s salesroom was overflowing with an all-star cast, including the superagent Michael Ovitz, the fashion designer Marc Jacobs, the hedge fund manager David Ganek and the newsprint magnate Peter Brant.
Eli Broad, the Los Angeles financier, was there, too. “Gold was up today,” he noted as he was leaving. “No one wants paper money — they want art.”
Then the Sotheby's auction at $190 million had some amazing prices:
“Buying was totally global,” Tobias Meyer, head of Sotheby’s contemporary art department and the evening’s auctioneer, said after the sale. “There were many new collectors who came into the market tonight.” ...
All eyes were on the 1986 Andy Warhol “Self Portrait,” which sold for $32.6 million, well above its $15 million high estimate. That and the Mark Rothko canvas each brought more than Jasper Johns’s “Flag” from the much-publicized estate of the best-selling writer Michael Crichton, which fetched $29.6 million at Christie’s on Tuesday night. Christie’s however, did better over all in its postwar and contemporary sale, with a total of $231.9 million.
The seller of the Warhol was Tom Ford, the fashion designer, movie director and collector. He was not at the Sotheby’s sale, but was said to be watching it on the Internet from his London home.
Can you picture this in your foyer? Yikes.
One parting shot. Most of this stuff is crap. Maybe Rothko, but the rest ... These newly-minted-alpha-males-now-art-connoisseurs love to show off their wealth to their buddies. I've never heard one of them admit that they do it for investment potential. They blather about how great the art is. Who wouldn't be impressed with this Andy Warhol. I may sound overly arrogant here, so forgive me; I can't help myself. I've been interested in art for many, many years and I have art and I have opinions. Maybe I'll pontificate one of these days, but for now, I'll just be snotty.
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My bullish USD warnings since 2009 on weekly and monthly charts have not changed and further USD strength and thus EURO weakness is still expected, so USD rally and EURO downtrend will continue.
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
Another great example of "Trickle down"... What a waste of previous productivity. Of course this thought is in the eye of the beholder.
Sad and getting more sad.
Ying-Yang
So, they cannot raise rate to .25%? Just .25%. Try It. No...wait...Syththemic Wisk? Just to .25%? GET MOVING.
A fool and his money...
(I love hearing the retort that "I don't understand". Oh, no... I lived and worked in the art world for many years. I do understand. Art dealers are the only people *more* crooked than bankers. These buyers are complete idiots. Keep spending boys. I *love* watching you get fleeced. There is justice after all...)
"Art dealers are the only people *more* crooked than bankers."
how true
ps ,
odd that someone saved 500 thousand by not installing
an acoustic shut off valve on a multi billion dollar oil well
in the gulf of mexico and a few weeks later someone
spent 30 million dollars on a canvas. where is the art?
the free market at work, the king is dead, long live the king.
the theme seems to be great pressure and imbalances demanding
equilibrium in increasing horrific waves of oil, ash and cash.
where is the art? i know a shut off valve on that leaking well
would be one valuable work of art. what happened to the techno,
oil, plumbing artists? i can't believe they have no tried and true
plan b, backup, standard operating procedure. ? 5/14/2010. bp.
no operating procedures? impossible. total darkness! no art here.
Hey, old friend, it's good to run across you again! (from the Roubini days)
http://maxkeiser.com/
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http://www.youtube.com/watch?v=66y2bxydu9I
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here some recent links.
warm and tingly.
have a cupcake.
"art is the lie that reveals the truth." p.p.
or "art is the lie that leads to the truth."
seems accurate in this context. or
in other words, art is a language, articulation
of meaning, by other means. the stuff that
differentiates apes from man on a certain level.
but owning it is the negation of its value, ironic.
or as someone once told me, "museums are where
art goes to die." i guess that goes for personal
collections as well?
i think art is collected for money laundering as was
mentioned and for other financial and personal problem
reasons but it functions as a means of controlling the
predominant historical narrative which lends credence to
the contemporary narrative which consists of artifacts and
defined relationships that dictate adherence from the
non collecting segment of the population/s. status, as
in all ownership, is imparted to the owner, by definition.
these owners dictate values to the "culture". every authority
has its valuable and trivial artifacts and art to reassure it of
its priorities and validity. materialism. if you knew enough
about art and history you could probably predict the fall of empire.
hmmm.
again a language thing. or meaning communicated by
other means. the lie that reveals the truth. metaphor,
a lie that reveals the truth. analogy, same thing. all
communication, same thing. and these metaphors,
analogies, languages and art all point to a cognitive
common point, that being what is known as a principle
or principles, but, it is the illusion that is
conjured up that has the impact. this is a central problem,
principle, and must be clarified for progress to take place.
when people are cognizant of the principles that surround them
then we have a population that operates, acts, is aware of
the significance of this level of existence. not so bad.
it has been referred to as consciousness.
imo. something to think about. we could use
more truth and less artless lies that don't reveal anything
but inspire the worship of .....money or ...debilitating and legally
binding debt.
actually artless lies are also revealing anyway.......
have a cupcake.
I wouldn't wipe my ass with these 'paintings'. Now, find me a Holland and Holland Double gun or a 1963 Ferrari GTO- a 63 Shelby Daytona, or anything from Faberge- we can talk.
Pity to waste so much cash on crap...
I still think my 60 x 60 peter max will be worth big bucks someday !!!! Art is tax free money on my wall !!!!!! p.s. warhol and lichtenstein isn`t trash, its better than cash !!!!!!!
Halsey Minor is also the single biggest CA state tax evader...
http://www.ftb.ca.gov/individuals/txdlnqnt.shtml
Perhaps some of his collection's proceeds can be diverted to that (worthy?) cause.
...their shockingly tasteless choices of 'art' indicate to me that we are somehow, somewhere witnessing raging inflation at the monetary level. Obviously the dollar has become so eroded and degraded that this schlock is MORE valued. Indeed, does "money" still have any store of value role to speak of...?
OR...is there a greater supply of fools to whom to eventually turn over this stuff than I had originally thought?
This outcome of raging monetary inflation what was predicted in 2001 by Peter Warburton: The debasement of world currency: It is inflation, but not as we know it
For once, I fully 100% agree with you.
Warhol is as much an artist as BS.
You're forgetting, sir, about the money laundering potential for artwork.
Buy the art.
Secure contract overseas to purchase art in alternate currency.
Conceal assets.
Works great as an off-the-books asset class as well.
Agreed that these alphas have terrible taste. They came from the sewer, made it through the Ivies, and when the Fed gives up... they will return to the sewer, without even the dignity of Charles Foster Kane.
"It was a gift from the Fed to these bankers."
This is the dumbest fucking thing I have heard in the last few years. Your inability to provide any evidence what so ever is proof. These people are just as clueless as you jackholes bidding up gold.
Gift from the Fed? No, they are the Fed.
"Jackholes bidding up gold" = YES, countries, institutions and bankers -- the same folks who are creating fiat currency and those massive credit derivatives are now bidding up fake gold...go figure!
Junk art IS the perfect symbolic representation of wealth created from nothing. It's symmetry ~ in a crooked sort of way.
South... do you understand what access to the discount window does to a man? What it does to an entire culture?
Nope, it's the second "dumbest fucking thing" that you've heard.
Just read your post aloud and you'll hear the first...
Isn't art absolutely amazing? It is worth something because people say it is, not because of anything it does. I have been laying out plans for some larger versions of my cursing fish (my logo) in steel-on-canvas. I have been told how no one will pay for cartoon art, and then I see some real trash selling for millions of dollars.
Patience pays off. If art is something someone does because they would rather do it than anything else, then they have truly found happiness - and the secret to life.
"It is worth something because people say it is, not because of anything it does."
Also like gold. Re fiat vs. gold, I will take the gold thank you.
Nice comment re doing art and the secret to life.
"It is worth something because people say it is, not because of anything it does."
Kinda like fiat money.