A $180 Million Picasso: What’s Making the Art Market Sizzle
The art market is hotter than a hoisted Rembrandt.
Last night at Christie’s in New York, Picasso’s “Les Femmes d’Alger (Version O)” sold for almost $180 million – the highest price ever paid at auction for a piece of art. There were said to be five bidders, and the winner remains anonymous.
At the same sale, a Giacometti sculpture, “L’homme au doigt,” went for a total of more than $141 million.
On May 5, at the first major auction of the spring selling season, Sotheby’s pulled in $368 million. It was the second-highest sale of Impressionist and modern art in the history of the auction house, according to The New York Times. The top seller was van Gogh’s “L’allée Des Alyscamps,” which fetched $66.3 million.
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The haul represented a 67 percent increase over Sotheby’s spring sale a year earlier, according to Bloomberg, which noted that many of the buyers were Asian.
The May 5 auction was only the second-highest because Sotheby’s held a sale last November that took in $422 million.
And tonight at a Sotheby’s auction of contemporary art, a painting entitled “The Ring (Engagement)” by the Pop artist Roy Lichtenstein could sell for as much as $50 million, the Times said.
What’s behind all those staggering numbers?
About a year and a half ago, the columnist Felix Salmon (then at Reuters, now at Fusion) ruminated about whether there was a bubble, which he defined as often driven by FOMO (fear of missing out), or a speculative bubble, one fueled by flippers, in the art market. His conclusion: the art market bubble was definitely not speculative.
“The people spending millions of dollars on trophy art aren’t buying to flip…,” he wrote.
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Still, Salmon said he was seeing signs that the market could be turning speculative. But they may have been false signals.
Recently, The Wall Street Journal wrote: “Spurred by the momentum of several successful sale seasons and an influx of newly wealthy global bidders, the major auction houses…say demand for status art is at historic levels and shows no signs of tapering off.”
But why?
In an April 17 article, the global news website Worldcrunch asked Financial Times journalist Georgina Adam, who wrote the 2014 book Big Bucks—The Explosion of the Art Market in the 21st Century, why so much money is rolling around the art market and driving up prices.
“Rich people used to be rich in terms of estate or assets, but not so much in terms of cash, like they are today,” she said.
“This growing billionaire population from developed or developing economies has money to spend and invest,” said the Worldcrunch article by Catherine Cochard. “For many of them, art — in the same way as luxury cars or prêt-à-porter — is an entry pass to a globalized way of life accessible through their wealth.”
That is a development that the keen eyes at the auction houses haven’t missed.
Budget ‘Chaos’ Threatens Army Reset: Retired General
One thing is standing in the way of a major ongoing effort to reset the U.S. Army, writes Carter Ham, a retired four-star general who’s now president and CEO of the Association of the U.S. Army, at Defense One. “The problem is the Washington, D.C., budget quagmire.”
The issue is more than just a matter of funding levels. “What hurts more is the erratic, unreliable and downright harmful federal budget process,” which has forced the Army to plan based on stopgap “continuing resolutions” instead of approved budgets for nine straight fiscal years. “A slowdown in combat-related training, production delays in new weapons, and a postponement of increases in Army troop levels are among the immediate impacts of operating under this ill-named continuing resolution. It’s not continuous and it certainly doesn’t display resolve.”
Pentagon Pushes for Faster F-35 Cost Cuts
The Pentagon has taken over cost-cutting efforts for the F-35 program, which has been plagued by years of cost overruns, production delays and technical problems. The Defense Department rejected a cost-saving plan proposed by contractors including principal manufacturer Lockheed Martin as being too slow to produce substantial savings. Instead, it gave Lockheed a $60 million contract “to pursue further efficiency measures, with more oversight of how the money was spent,” The Wall Street Journal’s Doug Cameron reports. F-35 program leaders “say they want more of the cost-saving effort directed at smaller suppliers that haven’t been pressured enough.” The Pentagon plans to cut the price of the F-35A model used by the Air Force from a recent $94.6 million each to around $80 million by 2020. Overall, the price of developing the F-35 has climbed above $400 billion, with the total program cost now projected at $1.53 trillion. (Wall Street Journal, CNBC)
Chart of the Day - October 6, 2017
Financial performance for insurers in the individual Obamacare markets is improving, driven by higher premiums and slower growth in claims. This suggests that the market is stabilizing. (Kaiser Family Foundation)
Quote of the Day - October 5, 2017
"The train's left the station, and if you're a budget hawk, you were left at the station." -- Rep. Mark Sanford, R-S.C.