For the 16th month in a row (longer than the 14 month stretch during the financial crisis), Swiss Watch exports have collapsed year-over-year. As Bloomberg reports, the 16.4% plunge in October is the biggest monthly drop in seven years, as demand weakened in almost every major market for Rolex and Omega timepieces.
Bloomberg adds that shipments fell to 1.68 billion francs ($1.7 billion), the Federation of the Swiss Watch Industry said in a statement Tuesday, with 13 of the top 15 markets were negative in October.
The decline was much greater than expected and was made worse because October was the weakest month of last year, according to Zuzanna Pusz, an analyst at Berenberg.
The longest slump in more than two decades is threatening employment in the Swiss watch industry, which had been riding a boom as rich Chinese bought more timepieces.
It does seem however that the rich still appreciate one thing...
As we concluded previously, 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.