If the Fed's bubble busting team led by Stanley Fischer was looking for runaway inflation, it could have easily found it earlier today without any particular effort, only not in the usual CPI place, but in the price of Women of Algiers (Version O), a "vibrant, multi-hued painting" from Pablo Picasso which moments ago became the world's most expensive artwork, selling for $179,365,000, included the house's premium in a Christie's auction.
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The same auction would also sell Alberto Giacometti's sculpture "Pointing Man," which was poised to set a record as the most expensive sculpture sold at auction. They were among two dozen masterpieces from the 20th century Christie's offered in a curated sale titled "Looking Forward to the Past."
The price for the Picasso surpasses the $142.4 million paid two years ago for Francis Bacon’s triptych, “Three Studies of Lucian Freud,” as well as earlier record of $120 million for Edvard Munch’s tortured “Scream.”
The price discovery, according to the WSJ, [5]was described as a "dogged contest at Christie’s New York salesroom, with the bidding starting at $100 million and shot up quickly, with four telephone bidders competing for the jewel-tone scene of Cubist-style women lounging at odd angles in a room festooned with lush, striped décor."
But as the price topped $145 million, the bidding war winnowed to a pair of telephone bidders and the room watched, hushed, a few pulling out their cellphones to capture the moment. After 11 minutes, the gavel fell and Brett Gorvy, global head of postwar art, fielded the anonymous winning bid.
The WSJ describes the painting as "a riot of colors and focuses mainly on a scantily dressed woman whose face evokes Picasso’s former lover, Françoise Gilot. She is joined by a disconnected tumble of other, smaller nudes who each seem to conjure other modern masterworks. The obvious muse is Eugène Delacroix’s 1834 scene of Algerian women in a fantasy interior. But Picasso also painted the work as a homage to his artistic hero and sometime rival Henri Matisse, who had died the year before."
Why the high price?
The Picasso was considered a trophy as much for its ownership pedigree as its artistic merits. The work last changed hands 18 years ago when the estate of U.S. collectors Victor and Sally Ganz sold it through the auction house to a London dealer for $31.9 million. Its seller on Monday remains anonymous.
However, considering that the estimate price for the painting was nearly $40 million lower than the gavel price, one also has to thank the record $150 billion in global QE injecting stock market liquidity (and removing bond market liquidity) courtesy of the ECB and BOJ each and every month.
Picasso’s record price on Monday reflects the trophy-hunting atmosphere dominating the global art marketplace now, as billionaires compete for the handful of masterpieces that come up for sale in any given season. Bragging rights are part of the works’ allure, but the collective bidding is also ratcheting price levels for dozens of the world’s top artists.
This is not the end of it. From AP [6]:
Experts say high art prices are driven by artworks' investment value and by wealthy new and established collectors seeking out the very best works.
"I don't really see an end to it, unless interest rates drop sharply, which I don't see happening in the near future," Manhattan dealer Richard Feigen said.
Impressionist and modern artworks continue to corner the market because "they are beautiful, accessible and a proven value," added Sarah Lichtman, professor of design history and curatorial studies at The New School.
"I think we will continue to see the financiers seeking these works out as they would a blue chip company that pays reliable dividends for years to come," she said.
With the one difference that art does not, in fact, pay any dividends, and any purchase is merely a gamble on further price appreciation driven by even greater asset bubbles in the future.
The identity of the buyer wasn't immediately disclosed, but there are really just two options: a bored "activist" hedge funder, who has been urging his portfolio companies to lever to the hilt and buy back his stock, or a just as bored Chinese billionare [7], seeking to bypass China's capital controls in new and, vibrant and multi-hued ways.
Now, the only question we have what is the Goldman bid/offer on the AJ-tranche of its brand new securitization product, the Pablo Picasso Backed Securities.
