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Even The Rich Are Cutting Back - Swiss Watch Exports Continue Collapse Despite Price Cuts
You know it's bad when... Following a dismal October, Swiss watch exports continued to collapse in November. As we noted previously, not only are luxury jet values dropping for the first time since 2009, London mansion prices plunging, San Francisco home sales collapsing, and Sotheby's laying people off, but, despite desperate major price cuts, Swiss watch exports tumbled 11% YoY (in USD terms), the worst November since 2008.
In Swiss Francs, this is the biggest November plunge in Swiss watches since 2009...
And in USD, the largest collapse since 2008...
As RBC's Rogerio Rujimori reports, it appears driven by the collapsing Chinese wealth bubble outflows via Hong Kong...
By region, the focus is likely to be on Hong Kong which registered declines of -28% despite the comparative easing by 19ppt (vs. -39% in Hong Kong, -18% in September and -18% in August), which suggests an underlying deceleration of 11 ppt. China expanded by 17% given the comparative also eased by 19ppt (vs. +5% in October, -13% in September and -39% in August), whilst USA declined by 5% and the UK expanded by 14% and Japan expanded by 9%.
All major regions experienced value and volume decline: Asia exports declined by 6.8% by value and 2.3% by volume implying ASP declines of c5%, whilst Americas value declined by 5.5% and volume declined by 7.9% implying ASP declines of 2-3%. Europe value declined by 4.5% and volume by 1.6% implying ASP declines of 3%.
All price points declined with CHF 200-500 and CHF 3000+ registering the most significant contraction (~10%).
Stock implications: We were expecting some improvement in export trends largely owing to easing comparatives, however the deceleration in Hong Kong comes as a surprise, illustrating continued pressure on the luxury watch segment in Asia and read-across to Swatch Group and Richemont is negative.
But, as we recently pointed out, aside from Swiss Watches, it appears only one thing has really benefited from The Fed's largesse (as demand for Diamonds and Fine Wine has crashed)...
The rich appear to be cinching up the purse strings, and as we concluded previously, that is not a good sign...
So the rich are becoming less rich? To an extent, yes. Recent declines in commodity prices and emerging market debt have no doubt taken a bite out of some big portfolios. Meanwhile hedge funds, the preferred investment management vehicle of the uber-wealthy, have done badly for the past couple of years, with some high-profile implosions generating headlines.
These disappointments have lowered the net worth of some big players and made others more cautious. Hence the lessened demand for the most pretentious assets.
The impact on the global economy? Almost certainly bad, since the 1% are the marginal buyers of so many reference assets like blue-chip stocks and government bonds. To the extent that they grow cautious, the bid for a lot of things will be lower, cutting corporate profits, equity valuations and high-end asset prices.
Put another way, when the only healthy part of an already-impaired system turns negative, everyone will feel the resulting pain.
Charts: Bloomberg
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Blame Apple's iWatch
The problem with Swiss watches is they just don't break.
My wife bought me a Tag Heuer over 15 years ago and I've smashed it into everything and nothing gives.
I can't get rid of that ....B....
Either!
What you're doing when you buy a swiss watch is you're paying a human serf to make something with tiny parts.
Sleep well.
As opposed to the Apple IWatch, assembled by slave labor
I saw no watchtowers at the Rolex factory
Or netting to prevent workers from taking the expedient way to the ground floor.
And people say American workers are so lazy.
I bet the folks that assemble the mechanicle watches consider themselves craftman and would tak offense
Dive Rolexes keep shitty time, have a hard time keeping moisture out, and need an expensive cleaning every few years. However, they look great and seem to hold their value well and can even appreciate.
I destroyed mine (possibly bent frame in moto accident), but still was able to sell it to a jeweler for some coin.
Yup rolex and tag huere are crap. They are like the apple of watches.
I bought a Rolex Explorer II at my first job out of college (working at a jewelry store, with the employee discount, I got it for $900 and change). I then kept it through my career in the oilfields. Moved up with it when I got my .gov job. And kept it after I went into business.
I owned it 14 years. The time it kept was "pretty good". I did have to take it in for cleaning and maintenance (yes, expensive, and it took a while each time).
On the other hand, I sold it for $1400 to a used watch dealer in Dallas (his ad was in the WSJ). I told him to pay me first. He did.
"They" PAID me $500 to wear that Rolex for 14 years...
* * *
I now own a stainless Rolex Datejust, very happy.
Chit dog, I used to buy Rolexes for $25.00 and loved the Seiko movements in them.
Ladies loved em too .......
My Swiss watch is over 25 years old, still looks great, I have the original box and papers…
It has proven to be a store of value.. a small part of my financial insurance and is worth a bit more “pre-owned" than it cost me when I bought it new.
.. and the folks who made it were craftsmen and paid well back then.
The best thing about $10 watches over the Swiss stuff, is you can throw the cheap one in the ocean and shed not a tear.
The CBC news in Alberta had a story about a pawn shop owner in Calgary, where the oil downturn has hit full force. He had a display case full of Rolex and other expensive Swiss watches that were originally worth $5K-$10K each and was now selling for $1K and up. The previous owners were only getting around $500 for their expensive watches, but the shop isn't taking any more in due to the glut. Sounds like a buying opportunity for someone willing to take the risk and ebay these puppies.
Who wears a watch?
..and what the retailers are setting out is fucking UGLY!...watch dials as wide as pop cans...wholy fuck, that watch weighs a pound...what gaudy shit...my kids have no interest..say no one in school wears a watch..if you're wearing a watch, you're probably also sporting an 80's hair style...and over 40...
That's MISTER to you, smoking stick...
Go hang out with TPTB, who isn't wearing a watch? You'll be able to count them on one hand, and they will most likely the be the people bringing you fresh drinks.
People with rugged schedules. People who work hard. These are foreign concepts on ZH? It hurts...
Looking over the charts, it appears the "Rich" have decided to use their money to buy the S&P 500?
10 years ago, my travel buddy and I (on a biz trip to HK and China) each bought a $100 Rolex in Hong Kong. He could not tell the difference between it and the real one he had.
Boy, was he happy and pissed at the same time. Told him to pretend he's got an "Heir and a Spare". He liked that and bought lunch.
p.s. Bonus for Casablanca "What Watch?" fans.
I suspect it's because young people don't really wear watches anymore. I stopped wearing mine four or five years ago. The smartphone is a modern pocketwatch.
Maybe Obummer can help out by getting a couple for his little buddy, Cl-Achmed, from Texas.
Or maybe ISIS can help save them by wearing Quality watches to synchronize their attacks with.
Or maybe we can buy one for each U.A.C. that crosses the border, after all, we pay a bid of $82,000 per 6 months for each of them.
FFS, there must be something we can do...
I did as well. Buckle digs into wrist when typing and who needs one when you look at your iphone every 12 seconds...
I bet they aren't buying fewer Eagles.
Watch's are dead.
Not so sure. Take a look around. My kids wear G-SHOCK and Ironman watches, all day every day.
I'd like to think that the new wealthy acknowledge that much of the glitter in the material past does little to fill the value of inner self. New wealths interest lies in adventure, creating new things, new ways and even their dress shows their lack of concern to impress. This ain't your grandpa/daddy's post depression success by measuring material gains (i.e. rolex)
im not a watch person, but if I were, id love to have a bell & ross.
as share of the economy continues to slide upwards im going to assume the wealthy are not cutting back. Unless we are all becoming poorer, even the rich?
The wealthy may not be cutting back per se, but there is diminishing marginal utility to MOAR watches for an individual. What may have happened is the number of nouveau riche being created by the financialized economy is cratering.
this^^
Eat the rich.
This is good all i wear are swiss watches. And not the bs battery powered ones either. I prefer a chronograph, hence my nick
You know things are getting rough when deBeers can't keep the price of diamonds propped up......
2014 = "Chocolate Diamonds" appear in Mall Jewelry stores.
2015 = "They're BACK!"
Unbelievable...and people are paying top dollar for that ugly BROWN shit...the ABSOLUTE lowest quality/clarity of a diamond...sells like mad becuase they named it "Chocolate"...just when I think we can't sink any lower.
Most people also don't know that there is (or, at least there was - I knew a girl who worked @ Tiffany & Co. in the 90's) a 600% markup on jewelry in typical retail stores. Ouch.
He went to Jared ...and got FV<KED!
"600% markup"...sounds a little low...my wife came home with a Sterling necklace sporting a $100 price tag...she paid $13 for it...and you know they still made a profit off that $13 price...
much product design is around 500, 600% mark up. but realistically you have to subtract the cost of business- design, development, manufacturing, sales, etc.
it's all about suppy and da man
.gov employees are the only ones who can steal afford a watch.
The price of watches and booze has also continued rise over that time partially adding to lower sales. When the price cuts are move widespread I'll agree it is game over. It's definitely starting though.
Grandpa...tell me story again about the thing you used to wear on your wrist..that thing that told you where the sun was....
Poor Carlos Slim lost $20b – as in twenty billion dollars – of net worth this year.
Now that's he only worth a touch over $50b, he understandably decided to replace his $40k Patek Philippe with a $12 Casio.
Now let's hope banksters start dumping never-worn Swiss watch collections in US/EU shops similar to JackRoad Tokyo. How else could one buy a Vacheron Constantin Malte Tonneau Skeleton Diamonds Tourbillon for less than $200,000?
http://www.jackroad.co.jp//product_info.php?cPath=22_55&products_id=34816
Well, now that the Chinese have blown the cover on what it really costs to make an accurate watch...
http://www.ebay.com/itm/Fashion-Mens-Luxury-Date-Gold-Dial-Stainless-Ste...
.
Its quartz which is trash either way
$189,721.61 Is trash?
Could you please post some data rather than your opinion?
What is the scrap cost of thus piece in precious metals and jewels? Even if the movement does not MOVE you (OK I made a funny) - how much am I paying over scrap for the design and labor? Inquiring minds want to know.
Thanks.
Seiko movements are less than a dollar each at the factory gate.
go long Timex...
Phuk Swiss watches . . .
Tick tock mother fuckers!
Partly it is the chinese stop buying extravagant watches. Due to China starts cracking down on chinese civil workers and business people spending bribery money.
Just replace the battery if you have one.
It's not the price of the watch that kills you, it's the maintanance. Cleanings, Pressure testing, replacement seals, etc..
Over the last 24 Years of ownwership, the maintanance costs are way more than the purchase price was.
Thats why my latest watch is a Seiko. Sorry...no Plug intended
I bought a surplus Soviet Tanker's Watch about 20 years ago. The thing is tough as a steam boiler.
Seiko - funny. Here is a story I will share.
Recently, I saw two Sieko tank watches on E-bay. New tags and never used. I put in "low-ball" bids and got both for less $35 each. They have both have genuine lizard straps - one brown, one black. The straps are a bit fragile but very high quality. I have a fancy Corum gold ingot watch with a corum lizard strap. A new Corum labeled lizard band would be a bit finer than the Seiko (and even more fragile) but would list for up to $600 - just for the strap!!!!!
The Seiko watches are almost indestructible and they are attached to very costly black and brown high end bands. Bargains are everywhere. Now if there is not apocalypse.......
I used to wear an Omega. Eventually it got busted. Now I wear a G-shock. Very durable and has some nifty features.
I have done consulting work for > 20 years for TAG Heuer, Rolex, Breitling, and Tissot, so I know the companies pretty well. You should know that watch sales are just a footnote for all of the SWATCH Group brands (Tissot, Omega, Longines, Patek Phillipe, SWATCH, Rado). Swatch Group and its subsidiary Swiss Timing make their money laundering money for Swiss Banks through the Olympics and various other sporting events (Commonwealth Games, World Cup Ski Racing), as well as washing huge amounts of cash through the Swiss-based IOC Sporting Federations like FIS (ski racing) FINA (swimming) FEI (equestrian) and so forth. Watch sales are just a cover, Swatch Group doesn't really care whether their watches sell or not.
Occasionally Swiss Timing gets caught (do a quick search on "SWISS TIMING" "FRAUD" "INDICTMENT" "BRIBERY" "COMMONWEALTH GAMES") but the Swiss authorities won't normally arrest Swiss citizens for bribery and fraud, so the scam goes on. Whenever you are watching sports on TV and you see TISSOT or OMEGA or LONGINES on the onscreen score bug, you are seeing a money-laundering operation.
Heuer, as far as I can tell, is not a scam like Swatch Group. Heuer (no longer a part of TAG, Ojjey sold it to LVMH in 1999) still depends on watch sales. But Heuer no longer knows how to make watches. They're all marketing guys in expensive suits, there's nobody left at LVMH Heuer who knows the first thing about designing timepiece components. They subcontract all of their manufacturing and design. Heuer also recently closed down their sports timing manufacturing division, which produced professional sports timing gadgets like photofinish cameras, timing photocells, start gates for ski racing, and timing transponders & antenna loops for motor racing.
Rolex still has some genuine horologists on their staff, and they manufacture their watches in-house. Rolex is a solid brand with a solid business.
I've been given a drawer-full of these expensive watches over the years as business gifts by these companies, but the watches all sit collecting dust in a drawer. Even if you get the watch free, you still have to pay $500-$1000 every few years for a "cleaning and pressurizing" in order to keep them running. I myself like TIMEX and Suunto, they're light, they have plenty of features unavailable on the expensive boat-anchor watches (alarms, altimeters, compasses), and if they break you can send them in for repair & refurbishing for $10.
The sun is my watch .... it runs a little slow .... loses about 6 hours a year .... have to reset it .... every four years ?
Fuck watches, as long as beer prices stay low, I am happy.
And fuck the rich, your time is coming Bitchez !
Buying western products means making the Mhite man richer
who comes back to rob you later