Thursday, 10 May 2012

Bang, bang, you're dead ... thankyou very much.

It's funny how sometimes you look at a topic or topics and 24hrs later what you were referring to springs to life. In yesterdays blog I was writing about the rush into the modern art market to hedge yourself against inflation. Well last night in NYC  at Sotheby's we got some more warnings. This is Warhol's "Double Elvis":

Do you like it? .... I do, but it's a screen print. Like much of Warhol's work the medium itself is important because much of what he was observing had to do with mass media and repetition. Do you know how many versions of the famous Marlyn heads there are? .... a lot. Well last night this work was predicted to fetch about USD 50m, but it didn't, it fetched 37m, just inside of the acceptable range in the catalogue. So what you say? It's still a lot you say? All true, except for the fact that this was bought by the Mugrabi family. The significance of this is that they own an estimated 800 works by Warhol. That dwarfs other Warhol collections. Now far be it for me to be cynical but others have suggested that it is in the family's interest to support the Warhol market when things are soft and to sell works into strength. It's kind of like the way Opec operates in the oil market. It's smart, it's legal and for the man in the street who cares, because only the mega wealthy get hurt . . . right? Ask yourself this: If I invest in an art fund as a hedge on inflation what really is the value of works such as these given the way the market is "supplied"? If you answered "I don't know", then you answered correctly and you know what not to invest in as a hedge. Of course you may like Warhol, Elvis and flaunting your cash . . . in which case you'll probably buy the Elvis from the Mugrabi's for 50m sometime in the next 2 years. 

I had a late night last night and didn't sleep well, so I only managed to grind out 50k's on the bike today. My stats look pretty ordinary and to tell you the truth aside from the fact it's a beautiful day here all I wanted to do was go home. Oh, well it was good I got out.

The other major benefit I got from being on the bike was the time to think about the o/n trade data out of China. April exports grew by 4.9% from a year earlier (back in March it was 8.9%), while imports rose 0.3% (March’s were a 5.3% increase). Now the analysts had expected 8+% in both. Clearly this data is part of a trend of slowing growth in China. As usual the markets are now tipping a cut in the Chinese RRR and that of course is bullish. But why? If the China is anything like the rest of the world the RRR cut won't be getting through to the economy this time because the banks are going to sop up as much capital as possible to support their property loan dominated balance sheets. I refer you my blog on Tuesday where I talked about this.

The bullets are running low on the belts of all governments now. Reloading might be futile. Bang, bang . . . it's dead.

Back to the Giro . . .

No comments:

Post a Comment