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As Spirits Soar, Two Bubbles Worth Watching

Tyler Durden's picture


And now for something off the beaten path. As the title implies, while the rest of the world is transfixed on the usual bubble candidates in traditional asset classes, two of the bubbles currently brewing well beneath the radar are a second derivative on the uber-wealthy class in China and Hong Kong, which appears to have a very disproprionate impact on spending patterns for ultra luxury goods, in this case cognac and Swiss watches. Not only that, but investing in these up and coming bubbles has some useful externalities: one can drink cognac, while a Swiss watch can be melted into its constituent gold or platinum once the inevitable hyperinflation finally hits. Alternatively, as these are some of the most marginal products available, any changes in consumption patterns here will be the first indication that the Asian party is ending...

Source: Goldman


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Thu, 03/01/2012 - 21:16 | Link to Comment Larry Dallas
Larry Dallas's picture

Asians have traditionally showed an insatiable thirst for luxury goods and bling bling.

Id rather see something that speaks of the average table earnings in Macau. Some of these whales are limitless. Some aren't.

Thu, 03/01/2012 - 22:40 | Link to Comment Doña K
Doña K's picture

Talking about Macau, my Japanese friends tell me that the banks are pushing loans (with newly printed money) with the proviso that they invest in foreign companies. No collateral needed, no personal guarantee. So two of them took these loans out and opened gift shops in Macau. I was told: Free money no risk. I guess Japan bets in exports by force win or lose. 

Fri, 03/02/2012 - 01:54 | Link to Comment Dane Bramage
Dane Bramage's picture

Peak Opulence!  (I has it).   Now we just need to track dwarf giraffe and gold grape sales!  ;)




Fri, 03/02/2012 - 02:55 | Link to Comment Maos Dog
Maos Dog's picture

You can order your giraffe here:


I am still waiting for mine to arrive.

Thu, 03/01/2012 - 21:17 | Link to Comment fonzannoon
fonzannoon's picture

Today was whacky. I wonder if this treasury selloff has legs.

Fri, 03/02/2012 - 03:12 | Link to Comment GovtMediaLiars
GovtMediaLiars's picture

It was an interesting day to be a market watcher. The last few years have been and I'd be a liar if I said I didn't love it.


Thu, 03/01/2012 - 21:17 | Link to Comment Lady Heather...UNCLE
Lady Heather...UNCLE's picture


Thu, 03/01/2012 - 23:37 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Dammit, my $350,000 salary won't afford this after my kids go to private school along with my fancy cars!

Fri, 03/02/2012 - 04:12 | Link to Comment Fluffybunny
Fluffybunny's picture

Did you read how that one guy experienced Deep Paralyzing Fear of the thought of not being able to afford his $30,000 gold club membership?

Either way, funny how Finland only ever appears in alcohol (as above) and school shooting statistics.

Thu, 03/01/2012 - 21:18 | Link to Comment Schmuck Raker
Schmuck Raker's picture

The death of Kim Jung Il is a black swan?

Thu, 03/01/2012 - 21:18 | Link to Comment Poor Grogman
Poor Grogman's picture

Trade-able items that you can carry on to an aircraft, hmmm.

Thu, 03/01/2012 - 21:27 | Link to Comment mayhem_korner
mayhem_korner's picture



Just a thought...if you're bartering swiss watches and brandy, what kind of air travel you doin'?

Thu, 03/01/2012 - 21:29 | Link to Comment arsenal009
arsenal009's picture

If u want to carry tradeable items on an aircraft, just put some gold coins with the rest of ur change.  When ur wallett passes through the metal detector, the security won't be able to tell the difference between the gold & ordinary coins.

Thu, 03/01/2012 - 21:35 | Link to Comment Bobbyrib
Bobbyrib's picture

Living in Jersey, I'm sure they won't be able to tell gold from the modern day quarter at Newark International. /sarcasm.

Thu, 03/01/2012 - 21:42 | Link to Comment superflyguy
superflyguy's picture

Actually the cool russian accented customs guy I spoke to when I was taking my gold out knew everything about all different kinds of bars and coins (even the face value of the coins!).


Thu, 03/01/2012 - 21:51 | Link to Comment MrSteve
MrSteve's picture

This is terrible, wrong information. Security won't be able to tell the difference between gold and ordinary coins. BULLSHT! Those scanners read density at the atomic scale (note paper currency doesn't show) so your gold will be opaque (highly visible) to the scanners and trip an indicator, just like uranium would. If you are serious, try using some lead slugs mixed in with your quarters the next time you board a plane. The minders will closely check your change. Tell them you are a plumber with working pocket change! 

The best tradeable items are registered share certificates of blue chip stocks. (can you say bearer bond-like) You could have a registered 10,000 share certificate of DuPont in your pocket when you board the plane and no one would know nor would it trigger an alarm. Any broker would research your registered shares, verify your registration with the database, your ID with your passport and thumbprint and then buy the shares. All perfectly legal. VOILA, you are in Canada with a small fortune. Or do you want to go from Greece to Costa Rico? In any language, voila, you are here!

Fri, 03/02/2012 - 02:45 | Link to Comment Milestones
Milestones's picture

Have you actully used this tactic? I am interested in this as well as any other thoughts along these lines.                 Milestones

Fri, 03/02/2012 - 06:57 | Link to Comment vato poco
vato poco's picture

Not that I would ever do such a thing - because it would be **wrong** - but it has been suggested in print another way to move assets across borders invisibly involves high-value collector-grade stamps. But then, I read a lot of trashy novels.

Thu, 03/01/2012 - 21:29 | Link to Comment MrSteve
MrSteve's picture

The sale premium added into a Swiss watch of whatever high cost will not fund a getaway from an Asian contagion- only gold will do that, or diamonds. What if the heavy watch is just a knock-off, a sad joke gone full circle? Go gold or stay at home. There is no alternative. Nobody ever fled the evil empire wearing Phillip Patek. Give us a break, this analysis is so weak.



You mean to tell us to flee with registered share certificates, so we can sell, say, 1000 shares of IBM to any registered broker anywhere in the world, for the local currency? That's a great way to move money anytime you move, with no ringing metal detectors.

Thu, 03/01/2012 - 22:35 | Link to Comment Poor Grogman
Poor Grogman's picture

"Nobody ever fled the evil empire wearing Phillip Patek"

As "official records" clearly show....

Fri, 03/09/2012 - 10:01 | Link to Comment Death and Gravity
Death and Gravity's picture

NOT diamonds, which are artifically inflated in price by the De Beers cartel.


PM only. Period.

Thu, 03/01/2012 - 21:22 | Link to Comment mayhem_korner
mayhem_korner's picture



I've taken in a hectolitre or two of cognac in my time...and I've got four guitar-shape bottles of Henessey X.O. that will be the very last thing I defend when the zombies come knockin'.

Thu, 03/01/2012 - 21:53 | Link to Comment i-dog
i-dog's picture

+1. Obviously junked by someone who's never tried it...

FWIW, consuming anything beyond a simple home-cooked meal, or wearing anything beyond a simple loincloth, is indulging in luxuries. To each his own.

Thu, 03/01/2012 - 21:25 | Link to Comment Gromit
Gromit's picture

Lafite Rothschild vintage wine prices off the boil....that was the leading indicator for me.

Fri, 03/02/2012 - 02:09 | Link to Comment VelvetHog
VelvetHog's picture

Then your head is in your arse.  No offense.  Just sayin'.

Thu, 03/01/2012 - 21:26 | Link to Comment arsenal009
arsenal009's picture

Gold swiss watches are sold at over 1000% premium.  Do u really think that when gold doubles or triples ppl are going to sell their watches back into the market for a fraction of the cost?  O_o

Thu, 03/01/2012 - 21:53 | Link to Comment Jendrzejczyk
Jendrzejczyk's picture

A world where a bowl of hot soup is a fair trade for a gold watch is not inconceivable.

Thu, 03/01/2012 - 22:00 | Link to Comment Piranhanoia
Piranhanoia's picture

As we are often reminded,   "In Philadelphia it's worth 50 bucks".

Thu, 03/01/2012 - 21:32 | Link to Comment The4thStooge
The4thStooge's picture

Bottoms up bitchez!

Thu, 03/01/2012 - 21:35 | Link to Comment bgilliam83
bgilliam83's picture

lmfao, if you buy this crap you are waiving the white flag.  What could the price elasticity possibly be of a fucking watch when SHTF?  Sun dials, my friends.

Fri, 03/02/2012 - 02:07 | Link to Comment VelvetHog
VelvetHog's picture

Sun dials are way too expensive where I am headed when the SHTF.

Thu, 03/01/2012 - 21:37 | Link to Comment non_anon
non_anon's picture

ah, drinking the spirits

my thoughts are soaring

but, alas , my posts are boring

Fri, 03/02/2012 - 02:06 | Link to Comment VelvetHog
VelvetHog's picture

Your posts may be boring, but mine flat suck.  +1


6 Old Chubs do no t a scholar make.

Fri, 03/02/2012 - 02:17 | Link to Comment tickhound
tickhound's picture

Oh cheer up sports... You both maybe small, but you're slow too.

Thu, 03/01/2012 - 21:41 | Link to Comment bgilliam83
bgilliam83's picture

Since shit is hitting the fan in a big way within about 2 months (obviously), I would advise rechargeable batteries and a pocket inverter.   I mean, since were gonna have a full blown trade war and everything...

Thu, 03/01/2012 - 22:17 | Link to Comment tobinajwels
tobinajwels's picture

Tyler how come you dont have any articles on Andrew Breitbart he was a really Good Guy!!

Thu, 03/01/2012 - 22:23 | Link to Comment Rogier
Rogier's picture

I did try melting my Swiss Swatch watch into gold. Didn't work. Tried it again. Didn't work the second time either. I think I'll go Bernanke on this one, 'cause sooner or later it's got to work!

Fri, 03/02/2012 - 02:04 | Link to Comment VelvetHog
VelvetHog's picture

I get it!

Thu, 03/01/2012 - 22:28 | Link to Comment cnhedge
cnhedge's picture

the pattern is not going to change, as china's inflation and bipolarization is not ending.

Thu, 03/01/2012 - 23:52 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

the 'swiss watches' are knock-offs and the 'cognac' is from ernest&julioGallo, modestoCA&theWorld

how much you want?

Thu, 03/01/2012 - 23:00 | Link to Comment q99x2
q99x2's picture

Made in China to return to former self. Chinese showing up for work both late and drunk.

Thu, 03/01/2012 - 23:04 | Link to Comment jonjon831983
jonjon831983's picture

Well, you could also keep the watch as a heirloom and pass it down the generations.

Fri, 03/02/2012 - 02:03 | Link to Comment VelvetHog
VelvetHog's picture

See Pulp Fiction.  .....up his ass.....

Thu, 03/01/2012 - 23:21 | Link to Comment Rogier
Rogier's picture

Sorry, wrong article.

Thu, 03/01/2012 - 23:18 | Link to Comment streetcrawler
streetcrawler's picture

What's the symbol for the 2x short swiss watch ETF?

Fri, 03/02/2012 - 00:42 | Link to Comment Diogenes
Diogenes's picture

Drunk as a fart but they know what time it is.

Fri, 03/02/2012 - 02:12 | Link to Comment VelvetHog
VelvetHog's picture

Drunk as a fiddler's fart.......

Fri, 03/02/2012 - 02:01 | Link to Comment VelvetHog
VelvetHog's picture

This Tyler, in particular, skeeves me out.  The degree of insight keeps me up at night (literally).

Fri, 03/02/2012 - 03:47 | Link to Comment billsykes
billsykes's picture

They are freaking watch nuts in HK rolex and hublot shops on every corner- like 7-11 in detroit.


Fri, 03/02/2012 - 04:05 | Link to Comment onebir
onebir's picture

Not the first weird Asian bubble. Did anyone notice the Pu-Er Tea bubble that ended in 2007:

When it burst, the multiple other bubbles in the Chinese & HK economies were left intact. So I'm not sure what information content these cognac & wrist-carbuncle bubbles might have...

Fri, 03/02/2012 - 06:01 | Link to Comment falak pema
falak pema's picture

While the Eurozone and USA wank themselves to death in a splurge of easy money liquidity at ZIRP or 1% handed out to their insolvent banks to play casino royale with, the BRIC countries are grinding their teeth as this money floods their markets in carry trades whereby their local currency is revaluated and their product pricing jacked up artificially.

Dilma Rousseff of Brazil has just reacted violently to the ongoing currency war waged by FED/ECB on BRIC nations, resluting in commodity price inflation and monetary revaluation.

Brazil slams rich countries over 'currency war'

Fri, 03/02/2012 - 07:21 | Link to Comment NoClueSneaker
NoClueSneaker's picture

Anyone sees an vintage guitars bubble ?

'59 Gibson Les Paul burst ... soon to reach a million price tag.

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