The news of the day for me is that "The Scream" by Edvard Munch sold for nearly $120 million to an anonymous buyer Wednesday at Sotheby's in New York, setting a new world record for a work of art sold at auction.
The thing to note here is that record art sales tend to occur near market tops. Consider this from the New York Times (emphasis mine):
At Contemporary Art sales, a mood to buy regardless of quality
LONDON: Professionals still marvel at the sea change that took place last week in the market for Contemporary Art. While the large totals posted by the big two in the auction world — £186.64 million, or $365.1 million, at Sotheby's, and just under £200 million, or $392 million, at Christie's — mobilized media attention, the real novelty was overlooked.
An unprecedented urge to buy, regardless of style, medium or period drove bidders. On Feb. 7 at Sotheby's, the first 32 lots, mostly priced in the hundreds of thousands of dollars, sold straight off. This had never happened before. By the time the seventh lot, "White Canoe" by Peter Doig, came up, a tense businesslike atmosphere prevailed. Remarkable for its rhythm in line and color, Doig's picture dated "1990/1991" is the interpretation of a film still. It ended up at £5.73 million, nearly quadrupling the highest estimate and setting a world record for an artist who had not yet risen to international prominence.
Three lots down it was Frank Auerbach's turn to shoot up to a world record price. "Camden Theatre in the Rain" sold for £1.92 million, again far above the highest figure suggested by Sotheby's. Auerbach is an utterly different artist from Doig. His picture, painted 30 years ago, reflected the distant heritage of German Expressionism revised by the Abstractionist experience.
Shortly after, two more world records were set, confirming that a new phenomenon was taking place in the auction market. First, a huge £2.82 million greeted the appearance of Gerhard Richter's "Abstraktes Bild" of 1991. Abstract though it may be, the picture conjures the image of blood in a stream sending back shimmery reflections. This was far removed from the first two world record winners. So was Piero Manzoni's "Achrome" that came on its heels. The creased fabric coated in white kaolin on canvas creates a rippling effect. At £1.7 million, it added one more world record.
Perhaps, some saw "Achrome," dated 1959, as an antiquity within "Contemporary Art." However, there is no reason to assume that the passage of time had much to do with the record price.
Precisely the same amount was paid later for Andreas Gursky's "99 Cent II, Diptych." This title describes two large cibachrome prints done as recently as 2001. Gursky's hugely expensive color prints, as meticulously figural as only pure photography can be, show no stylistic link to the earlier record-setting works. The visual appearance of art, it seems, was not a significant factor in the making of a price that evening. The 79 works sold for an aggregate £45.76 million could not have made up a more disparate bunch. Sotheby's performance was remarkable.
Yet, on Feb. 8, Christie's outshone that with 17 world records and sales totaling £70.42 million. True, the makeup of the two auctions was not quite comparable. The inclusion of Francis Bacon's "Portrait II" added £14 million, or $27.54 million, to Christie's score and set a world record for the artist — the previous high had been reached at Sotheby's New York in November when "Version No.2 of lying figure with hypodermic syringe" brought $15 million.
Bacon's "Portrait II" marks the tail end of a century-old tradition in which consummate craftsmanship mattered. Had buyers scrutinized and compared the works on offer, the Bacon might have operated as a deterrent from many other pictures.
Fortunately, what the eye saw had no more verifiable bearing on the urge to buy at Christie's than it did the previous day at Sotheby's. Buying seemed to be an end in itself for many. Of the 84 lots offered at Christie's, only two failed to find takers, an unheard-of success rate in any major art sale in recent years. Astonishingly, the sale took off from the moment "go"with small works by New York school artists of 40 years ago. Of late, these encountered success if represented by spectacular lots associated with memories of the New York art scene at its most exuberant in the 1960s. Minor pieces often hit the dust. Not last week, though.
Roy Lichtenstein's "VIIP!" which opened the sale, was a tiny thing, 20 by 30 centimeters, or 8 by 12 inches. At £580,000, it overshot the upper end of the estimate by half, belying accepted market wisdom that Pop Art is supposed to do well when it can be seen from 10 yards away.
Frank Stella's 31-by-31-centimeter "Labyrinth" came next and fetched an equally amazing £288,000. When Jim Dine's diminutive"Flesh Tie" (28 by 30 centimeters) that followed managed a creditable £138,000 instead of crashing unsold, some wondered whether "small is beautiful" now applied to Contemporary Art.
However, Alberto Burri's very large "Sacco e rosso" (The Bag Is Red) dispelled the notion as it became the first big winner in Christie's evening auction with a world record price of £1.92 million. Aesthetics hardly accounted for the feat. A piece of discarded burlap somehow attached to a canvas painted a solid bright red at right and black at left cannot be assessed in these terms.
Did the safety of old "contemporary" do the trick or was it the charm of a genuine collection? All these works had been sought out over a lifetime by an Italian fan, Riccardo Tettamanti, who died in 2005 at age 81, and all were rapturously received. Rothko's superposed color bands with blurry edges of 1968 that sold for £3.38 million at double the high estimate, or Cy Twombly's outsized scribble that also exceeded the high estimate at £2.14 million, could thus be argued to reflect a melancholy homage to a bygone era of not so "Contemporary Art" and to one of its grand pioneers.
But the rest of the session demonstrated that sentimentality did not play much of a role. Works held by their consignors for a short period were also snapped up. An extraordinary instance is a solid dark blue panel called "IKB 77" by Yves Klein. Bought at Phillips de Pury Luxembourg in May 2001, it sold last week at Christie's for £1.58 million — again a world record price.
In some cases, the notoriety of the artists was a factor. Warhol's portrait of the French actress Brigitte Bardot done in his usual photography- based technique owes something to the names of the artist and the sitter alike. However, the fact that a picture expected to be knocked down between £1.5 million and £2 million was disputed to the tune of £5.39 million points to new forces at work that auction professionals had not anticipated.
Pictures that did not fit the artists' best known image in the public eye danced their way to success instead of dropping dead. Warhol's "Three Women" resembled an outsize contact sheet repeating a poor quality photographic image. It exceeded the high estimate at £4.44 million and confirmed once more a determination to buy, no matter what.
Given that kind of mood, the uniform success of pretty much everything at Christie's becomes less mysterious. The two auction house propaganda machineries assured that new buyers from Russia, China and the Middle East were behind the irresistible surge.
The reality is more complex. Western buyers were heavily involved in the game. Whether from East or West, the massive injection of new money in search of something to buy was the real source of euphoria. Unfamiliar with art, its history and complexity, many of the new bidders pounce on Contemporary Art because it is hyped to death by auction houses that have less and less great art from the past to offer, and because, by definition, Contemporary Art does not make you look or feel ridiculous in the art world if you know nothing about what preceded it.
The snag about the strength injected by new bidders into the market is that it depends more on slogans trotted out by marketing teams than on personal conviction and desire.
At the merest sign of financial trouble, the new converts to art may want to recoup what they see as assets. And the day that too many solid blue panels, acrylic interpretations of photographs, crumpled fabrics covered in white kaolin, and the rest, tumble onto the market, pandemonium will break out.
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Interesting stuff, eh? Here's the kicker. This article was published Friday, February 16, 2007
So does this mean that the S&P is going to zero tomorrow? No. But it should give one pause if one is given to initiating longs after a 3-year rally, well above the 50-day moving average. Not a good spot to be bidding madly.
Today I see exposure up to the 1407-1410 area on the cash S&P index, and the potential for 1382 on the downside.
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