A $180 Million Picasso: What’s Making the Art Market Sizzle

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A $180 Million Picasso: What’s Making the Art Market Sizzle

By Ciro Scotti

May 12, 2015

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.

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.

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 21^st 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.

Americans Just Went on a $32 Billion Credit Card Shopping Spree

Credit cards are pictured in a wallet in Washington, February 21, 2010. REUTERS/Stelios Varias

By Millie Dent

September 9, 2015

Americans may be heading for another credit card crunch. After paying down almost $35 billion in credit card debt in the first quarter of the year, consumer charged up a storm in the second quarter, racking up $32.1 billion in new debt, according to CardHub, a credit card comparison site. CardHub says that’s the second highest quarterly total since it began keeping data on credit card debt in 2009.

While that buying binge could potentially signal improved confidence in the economy and in their own financial prospects, CardHub warns that the debt risks are building. It projects that consumers will close out the year with an annual net increase of more than $60 billion in credit card debt, with the total credit card debt outstanding climbing to more than $900 billion, the highest since the recession.

CardHub CEO Odysseas Papadimitriou says that jump brings Americans “perilously close to a tipping point at which balances become unsustainable and delinquency rates skyrocket.”

For 7 out of the past 10 quarters, consumers have racked up more debt than they’ve paid off. Papadimitriou cites that as evidence that consumers are going back to the bad habits they had before the economic downturn.

CardHub based its study on data from the Federal Reserve, and if the results are a sign of trouble then another new report from the Federal Reserve Bank of New York suggests that problem is even worse than it looks. In a report called “Do We Know What We Owe,” the New York Fed found that people widely underestimate their credit card debt, telling the Fed’s survey-takers that it’s about 37 percent lower than what lenders say it is.

So if we are actually getting to a tipping point with credit card debt, it may be even closer than we realize.

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Watch Jeb Bush Do His Best Donald Trump Impression with Stephen Colbert

Republican presidential candidate Jeb Bush waves as he arrives to address a legislative luncheon held as part of the "Road to Majority" conference in Washington

REUTERS/Carlos Barria

By Michael Rainey

September 9, 2015

Unless you've been in your own personal media blackout for the last few days, you're probably aware that Stephen Colbert kicked off his new show Tuesday night and that Jeb Bush was one of his first guests. While the maiden voyage of the new “Late Show” has drawn mixed reviews -- “promising, if he relaxes” says USA Today, referring to the host – the show provided plenty of entertaining bits and compelling if somewhat odd moments.

Like much of the show, Colbert’s conversation with Bush was a mixed bag. Both host and guest seemed a bit nervous and some of their lines fell flat. Surprisingly, one of the more entertaining parts of their conversation never made it on air: Colbert had Bush read some text written in the bombastic voice of Donald Trump. Bush was game for the joke, and the results are worth a look.

The fun at Trump's expense starts at the 2:32 mark, when Stephen Colbert refers to the "big, orange elephant in the room."

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Here’s Why Home Prices Are Climbing So Quickly

REUTERS/Gary Cameron

By Beth Braverman

September 9, 2015

Want to buy a home but finding slim pickings? Blame the builders.

New home construction has not kept pace with the improving job market in recent years and is part of the reason that housing inventory is so scarce and home prices are growing so quickly, according to a report released today by the National Association of Realtors.

After over-building leading up to the housing bubble, developer laid off workers and scaled back construction by more than 75 percent. After the crash many of those workers migrated to other industries, making it harder for builders to quickly ramp up work. There are also fewer builders now than there were a decade ago, with many going bust in the bubble and others consolidating with competitors.

While home starts have come back since the recession, the new NAR report finds that in two-thirds of markets homebuilding activity has not kept pace with the number of newly employed workers. In particular, construction of single-family homes remains at less than half its prerecession levels.

Many of the markets with the largest disparity of jobs versus home construction were hit hardest by the housing crisis but have fully rebounded, including San Jose, San Francisco, San Diego and Miami. New York is also among the top cities where home building has not kept pace.

There are several reasons that new home construction has grown so slowly in recent years, including rising construction and labor costs and tight credit. Despite those headwinds, new home construction is expected to grow by more than 25 percent this year.

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Millennials to Employers: Show Us the Money

iStockphoto

By Beth Braverman

September 8, 2015

When it comes to company loyalty, money matters to millennials. Twenty-nine percent of millennials say that a higher salary is the biggest contributor to their loyalty, according to data released Tuesday by the Staples Advantage Workplace Index.

That compares to 20 percent of the overall workforce who place a priority on salary. The difference could be related to the fact that millennials tend to make lower wages than other workers and face higher fixed costs on things like student loans and rent.

Still, the job market is tightening, making it easier for millennials who feel they are underpaid to look elsewhere for work. The unemployment rate for millennials has fallen by nearly 40 percent since its peak in 2010.

Millennials are willing to work long hours but they want to be able to do so on their own terms. More than half of younger workers said that they work from home after the work day is over, compared to 39 percent of the all workers. Nearly half of millennials said that increased flexibility would improve their happiness.

Other important factors for millennials are office perks such as a gym or free lunches, having an eco-friendly office and a company culture that encourages breaks.

Whether or not they’re happy with their current roles, millennials are looking toward the future with ambition. Seventy percent of those surveyed said they expect to be in a management position in the next five years.

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Gas Prices at an 11-Year Low for Labor Day Weekend

Eric Gaillard

By Millie Dent

September 4, 2015

Drivers will be paying less at the pump as we head into one of the largest travel weekends of the year. Gas prices over Labor Day weekend haven’t been this low since 2004.

The national average price of gas is currently $2.44 per gallon, 99 cents less than this time last year, according to AAA. The average consumer can expect to save $15 to $25 on each trip to the gas station.

AAA estimates that 35.5 million people are planning to travel this weekend, a 1 percent increase from last year. The majority of travelers, 30.4 million, are expected to drive to their destinations, a rise of 1.1 percent from last year.

Gasoline prices are moving lower thanks to the falling price of crude oil. Oil has been hit by worries over economic growth in emerging markets, Iranian oil flooding the market and crude oil inventories rising due to economic and weather factors, a U.S. Energy Information Administration report finds.

For drivers, there’s more good news ahead. AAA expects gas prices to keep falling, with gas selling for $2 or less a gallon by Christmas in many parts of the U.S.

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