Art, The Market and The Economy

I’ve heard it said more than once that valuations in the art market are tied to the stock market, and that over a 10 year period, one would expect the two to mirror each other. With the subprime collapse this past summer, and the 30% drop in U.S. brokerage stocks (though Goldman and Lehman shares are now recovering), the NYT raised the spectre last month of a wave of important works coming to market this Fall in Europe, suggesting the sellers were trying to get ahead of a swoon in prices.

Strangely, their dealers couldn’t get them to acknowledge that the sheer notion of an onslaught of consignments in June and July, and subsequently reported in the media, would certainly cause buyers to get nervous/thrifty.

My own datapoints are these: In 1998 or so I saw a photo by Irving Penn at a gallery for US$35,000. It was fabulous, although I didn’t know who the artist was nor the price until the “wow” escaped my mouth. That same photo today is probably worth US$300,000. The Dow hasn’t seen that kind of rise! (If you are interested in seeing some Penns, stop by the Corkin Gallery starting today in Toronto’s Distillery District. Also peek at works by Montreal’s fabulous Robert Bordeaux.)

Group of Seven paintings have enjoyed similar rallies, mind you, despite not being collected much beyond the Canadian borders. Beautiful 14″x20″ Lawren Harrises that were sold by Sotheby’s for $18,000 in 1995 at the Park Plaza Hotel auctions could command upwards of $200k today.

On Thursday night at the annual fundraiser for the Canadian Art Foundation, the live auction was tepid at best. Never a sign of a thriving economy. Is it that no one had enough to drink (wine service was spotty), or that the pieces didn’t excite the 650 person crowd? This was our 5th year as a sponsor, so we had the benefit of some perspective.

Last year, one piece went for $35,000 (later flipped in NYC by a knowledgeable dealer for US$120k; or so the story goes), while this year Toronto-based photographer Michael Awad was the top dollar artist at just under $8,000. His photograph of hundreds of magazine covers was much loved, which was a delight for me as we attended public school together and first learned photography at the Toronto School Board’s Saturday Morning Classes at Castle Frank Public School. Other live auction works - obstensibly the prize of the night’s donations - went for less than $2,000, which made we wonder if the Bay Street crowd in attendence was worried about what bonuses in December will look like.

The bright side was that the event was bigger than ever, with more corporate sponsors than I had seen in the past. All good for the Foundation, regardless of what happens this Fall at Christies in London or New York. But what does it tell us about the mood of the economy?

Other economic straws in the wind include a drop in Thoroughbred auction prices in Kentucky last month, and then there’s the global yacht market, as we’ve discussed here in recent weeks (see post “Yacht watch“, September 2-07).

If the upcoming auctions in London prove to be middling, perhaps the Fed’s 50 bps cut won’t have been the economic cure all it was prescribed to be. The tens of thousands of recent job losses in the U.S. mortgage industry can’t pass with the silent splat of a bug on the windshield, can they?