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What 'Trickle-Down' Wealth Effect?

Tyler Durden's picture




 

Nothing says 'wealth' like a luxury Swiss watch (or two), and despite the equity markets of developed 'wealthy' nations resurgent in their inflated-asset-based selves, it seems the demand for luxury watches remains subdued at best. While Asia appears to be a big drag (as we noted here), Europe and the US are also plunging; but have no fear as African sales are up 25% (there's the real wealth effect?). The 'wealth effect' plan appeared to be working until the beginning of 2013 when, in spite of the almost unprecedented and inexorable rise in equities, Swiss watch exports collapsed to their worst levels since the great recession. Transitory blip? Doesn't seem that way as the most recent YoY change is the worst in six months.

 

Spot the diminishing returns of the wealth effect... or can the wealthy have too many luxury watches?

 

and where is the growth?

 

Charts: Bloomberg and Swiss Watchmaking Industry

 

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Thu, 07/11/2013 - 21:14 | 3743589 NidStyles
NidStyles's picture

WTF does this have to do with anything? Swiss watches are garbage...

Thu, 07/11/2013 - 21:17 | 3743597 seek
seek's picture

Huge swaths of economic data are tampered with. It's the wierd little corner data sets -- like swiss watches -- that reveal uncorrupted insight into the state of the world economy.

I'm grateful that Tyler picks up these little tidbits and centralizes them for us so we can see behind the curtain.

Thu, 07/11/2013 - 21:25 | 3743611 tarsubil
tarsubil's picture

People ask when is it going to crash but what if it already has? Kinda like that drug addict on PCP who gets shot in the chest but keeps on moving until he's completely dead.

Thu, 07/11/2013 - 21:32 | 3743628 NidStyles
NidStyles's picture

When empires collapse it's not measured in days or months. It is measured in decades and centuries of harsh decline until the breaking point comes to a peak and then everything just falls apart.

This is not going to be some fast and sudden change, it's going to be a long grueling and painful collapse thanks to the government deciding to do that it can to hold onto it's "power". Outside of war, we are only seeing the very beginning of this party, the music hasn't even started yet. 

 

Fri, 07/12/2013 - 09:45 | 3744733 Element
Element's picture

Well at least we now know what the 'shape' of the recovery is ... not any shape in the alphabet.

Thu, 07/11/2013 - 21:33 | 3743622 NidStyles
NidStyles's picture

Unfortunately market shifts in desired items do not display the conditions of the market in general. They only display the demand and whims of the consumer market that drives them.

The idea that you can examine individual sectors and line items to get an idea of the overall economies of the world is the same flawed idea that makes for the CPI where the items that are measured are changed every 3 years.

 

Swiss times pieces have fallen out of favor recent due to the rise in popularity of the Citizen Eco-Drives pieces and Seiko automatics. It has nothing to do with the economy overall, and more to do with the popularity of the Japanese time pieces increasing for the past ten years, and the reality that in general Swiss timepieces are outdated and generally garbage compared to the Japanese ones.

 

 

Thu, 07/11/2013 - 21:35 | 3743626 Strut
Strut's picture

I purchased my first Swatch about 20 years ago for ~$50. I still have it, and it still keeps time just fine. I'd buy a new one, but they aren't worth a shit now.

Thu, 07/11/2013 - 21:35 | 3743637 NidStyles
NidStyles's picture

If half the people in here were as intelligent as they claim, they would know better than to buy into this sort of garbage. However most of them are likely wearing over-priced garbage watches that will not last much more than 5 years. My Citizen has been going for over 12 already.

Thu, 07/11/2013 - 21:57 | 3743706 Seasmoke
Seasmoke's picture

Have a Tag Heuer Carrera for over 10 years and its the best watch I have ever had. However the only thing I plan on having on my wrist nowadays is a ZH tattoo.

Fri, 07/12/2013 - 00:11 | 3744018 Scro
Scro's picture

My 23 year old submariner is doing just fine. It's accurate and looks great. Please share more nuggets of your wisdom.

Thu, 07/11/2013 - 21:50 | 3743688 prains
prains's picture

The burger index is another

Thu, 07/11/2013 - 21:15 | 3743593 scatterbrains
scatterbrains's picture

or maybe in these times no one want's to be caught dead wearing a Girard Perreqaux with 99.99% of the population staring at you and that watch on your wrist.

Fri, 07/12/2013 - 08:44 | 3744523 lakecity55
lakecity55's picture

Wear a more conservative tag heur.

Thu, 07/11/2013 - 21:25 | 3743607 buzzsaw99
buzzsaw99's picture

Watches are passe. (not saying the usa economy doesn't suck ass though because it does, mightily)

Thu, 07/11/2013 - 21:26 | 3743615 tarsubil
tarsubil's picture

Huh? It seems every douche bag in town wants a ridiculously big and obnoxious watch these days.

Thu, 07/11/2013 - 21:38 | 3743630 eXMachina
eXMachina's picture

Is that a wrist I see you wearing on your watch?

Thu, 07/11/2013 - 21:35 | 3743635 buzzsaw99
buzzsaw99's picture

I guess I don't get out as much as you do. I see more designer phones than watches these days.

Thu, 07/11/2013 - 21:37 | 3743644 NidStyles
NidStyles's picture

Yeah, open them up, they are all running Seiko built movement. No one uses real Swiss movements anymore because they are not that good.

Thu, 07/11/2013 - 21:39 | 3743650 infinity8
infinity8's picture

Those would be the douche bags who don't WORK for a living. Who wants their arm ripped off? "There's watch guys and T-shirt guys" - old quote from an old friend. But, as Buzz said, passe. Now it's who's addicted/what type of phone they have and how much they're on it. Nextel was popular with dudes who WORK.

Thu, 07/11/2013 - 21:43 | 3743666 NidStyles
NidStyles's picture

A good analog watch is something every survivalist/diver/hunter/boat guy should have. You can never lose your bearings if you have a good analog watch.

Thu, 07/11/2013 - 21:40 | 3743651 Pegasus Muse
Thu, 07/11/2013 - 21:40 | 3743653 Quisat_Sadarak
Quisat_Sadarak's picture

"every douche bag in town wants a ridiculously big and obnoxious watch these days"

Bing!  So true!

No if we can have a graph which shows the upsurge in Flava-Flav style watches, we will see where the market share went.  Just kidding.

However, to be fair, it is very interesting that the drop off in Swiss watches coincides closely with the 2008 downturn.  And it appears to be rolling over again.

 

Thu, 07/11/2013 - 21:47 | 3743677 WTFUD
WTFUD's picture

yeah so what? if i could fit one of those large sceen tv's on my wrist, i would.

Fri, 07/12/2013 - 06:01 | 3744330 sessinpo
sessinpo's picture

tarsubil        "Huh? It seems every douche bag in town wants a ridiculously big and obnoxious watch these days."

 

Yep. They are called smartphones. LOL

Thu, 07/11/2013 - 22:10 | 3743745 Shad_ow
Shad_ow's picture

"Trickle down wealth" is passe too.  What we should be calling the Obama economy is "trickle down sh*t."  It's the new normal. You will get used to it and like it.

 

 

*Does this post earn brownie points with the NSA?

Thu, 07/11/2013 - 21:36 | 3743640 ChaosEquilibrium
ChaosEquilibrium's picture

sort of on topic:  per CNBS--CREDIT SUISSE-"It is stupid to own gold".........looks like CS backed the semi up with Gold shorts to the 1K level to cover their bet the bank on green derivatives and EU exposure:):)

 

other words......buy buy buy:).....CS is in trouble:)

Thu, 07/11/2013 - 21:42 | 3743662 EmmittFitzhume
EmmittFitzhume's picture

A Rolex for everyone!

Thu, 07/11/2013 - 21:45 | 3743669 NidStyles
NidStyles's picture

Actually those are British time pieces..

Thu, 07/11/2013 - 22:10 | 3743742 JohnG
JohnG's picture

Swiss.

Thu, 07/11/2013 - 22:17 | 3743768 NidStyles
NidStyles's picture

Founded in England chief. You are on the largest library of information in the world, and you couldn't even look it up.

Thu, 07/11/2013 - 22:31 | 3743797 JohnG
JohnG's picture

 

 

Half correct:

Rolex SA and its subsidiary Montres Tudor SA design, manufacture, distribute and service high-quality wristwatches sold under the Rolex and Tudor brands. Founded by Hans Wildorf and Alfred Davis in London, England in 1905 as Wilsdorf and Davis, Rolex moved its base of operations to Geneva, Switzerland in 1919

SA: Société Anonyme in French (as commonly used in French-speaking countries, such as France, Luxembourg, Switzerland, and Monaco; and in partially Francophone countries like Belgium, Lebanon, Tunisia, Morocco, Mauritania, and various other African countries)

 

Soooooo, I guess your right, up til 1919.

 

Mine says Swiss Made (actually my grandad's....inherited).

Thu, 07/11/2013 - 21:59 | 3743711 Sutton
Sutton's picture

Wealth now is "The Wealth Effect"

A Continent of prosperity is reduced to the phantoms and delusions of phd's,

 

Thu, 07/11/2013 - 22:15 | 3743755 PT
PT's picture

I tried expensive watches, I tried cheap watches, they all kept breaking so I stopped buying them.  Made do without.  Then mobile phones got little clocks on them.  (But I still avoided mobile phones for as long as possible - eventually I got one to help me find a new job).  Had a worksite where phones were banned, bought a cheap watch, watch band broke within weeks, still got what's left in my pocket ...

Fri, 07/12/2013 - 06:23 | 3744340 Bangin7GramRocks
Bangin7GramRocks's picture

You sure are one clumsy bastard huh!

Fri, 07/12/2013 - 08:41 | 3744517 lakecity55
lakecity55's picture

Yeah, if you are working, take it off and put it in your pocket. It keeps scratches off the crystal.

Fri, 07/12/2013 - 13:57 | 3745951 Thisson
Thisson's picture

Or try a nurse's watch!

Thu, 07/11/2013 - 22:17 | 3743766 PT
PT's picture

People still talking about "trickle on", I mean "trickle down".  So, still no-one thinking about "Flood Up".

Fri, 07/12/2013 - 00:26 | 3744048 rosiescenario
rosiescenario's picture

I wonder about this chart....when you look at Swiss watches they are priced all over the place from $200,000 down to $150. They also make a great many quartz movements (Rhonda) that go into watches completed elsewhere....ditto for the ETA movements that end up in watches that are even being made here in the U.S. by new companies. Given our shit economy, it is surprising how many new U.S. specialty watch companies have come into being. (For a list go to OceanicTime.com).

I collect Seiko dive watches...old and new and they are ok, but unless you buy the higher end Seiko's the movements do not compare to better Swiss watches.Personally I think Rolexes are way overpriced. For 1/12 of the cost of a Rolex dive watch I can buy a hand assembled dive watch from Germany or the U.S. which is better....but lacks the 'flash appeal' of a Rolex. For those that know something about watches, of course, these semi-custom made ones have far more appeal than a run of the mill Rolex with its antiquated design.

 

When I started diving we actually used dive watches and Navy tables to avoid getting bent. Today everyone uses dive computers and most of these come from Suunto and they use an algo that is quite a bit different than the Navy table. They also keep track of multiple dives over days and give you ceilings when you go into decompression diving.

Fri, 07/12/2013 - 08:40 | 3744512 lakecity55
lakecity55's picture

Ha, my watch is 'Swiss-made', but assembled from parts made elsewhere. For a little-known brand, it is self-winding and actually keeps pretty good time.But, it is not a truly Swiss watch, as they lead you to beleive.

Wht's next, swiss cheese without holes due to the depression?

Fri, 07/12/2013 - 06:02 | 3744331 sessinpo
sessinpo's picture

Did a little deeper Tyler.

 

More like trickle up poverty effect.

Fri, 07/12/2013 - 07:39 | 3744413 CheapBastard
CheapBastard's picture

No more secret Swiss bank accounts....sinking Swiss watch exports....what's left?

 

Swiss cheese full of holes?

Fri, 07/12/2013 - 09:47 | 3744745 creeko
creeko's picture

For the most part, a person who needs to strap a piece of metal machinery to his wrist in order to know the time is an oddity to me.  Of course, there are exceptions to this, but I think most people can survive just fine without having access to instant time data on the wrist.  It's kind of stupid, semi-robotic, and infused with the aroma of slavery.  I'd rather have a corkscrew strapped to my arm.  Anything else you guys think should be strapped to the arm?  Let's hear it.   

Fri, 07/12/2013 - 10:18 | 3744875 dunce
dunce's picture

I have always wondered who buys these super expensive watches and why. It seems to be Thorstein Veblems conspicuous consumption. Long ago the people with great wealth and power could travel about without being assaulted and robbed for the most part. These days unless their wealth is tied to celebrity they erect invisible barriers and modesty disguises. Bill Gates does not wander the streets taking in the sights and sounds of New York , Detroit or Chicago. One of the common strong arm robberies is now people having their iphone ripped from their hands in any public place. Those free phones do not say enough good things about the user.

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