The Back Room: Will May Go the Market’s Way?

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This week in the Back Room: a temperature check before May’s market mania, the museum director carousel keeps spinning, anxiety in the antiquities market, and much more—all in a 7-minute read (1,933 words).

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Top of the Market

Grand Spectacle or Grand Reckoning?

Jean-Michel Basquiat, El Gran Espectaculo (The Nile) (1983). Estimate on request; in the region of $45 million. Courtesy Christie's Images Ltd 2023.

Jean-Michel Basquiat, El Gran Espectaculo (The Nile) (1983). Estimate on request; in the region of $45 million. Courtesy Christie’s Images Ltd 2023.

Tim here. Fears of a downturn have been stalking the art market from major sales event to major sales event, global city to global city, for at least the past six months—and, by some accounts, a year or more.   

And yet, even amid these choppy macroeconomic conditions, it seems that industry players are charging into the next three weeks of New York art fairs, auctions, and primetime gallery openings with mentalities remarkably similar to those they exhibited a season or two ago.  

We can debate whether it would be more accurate to call the prevailing sentiment “cautious optimism” or “optimistic caution.” But either way, the point is the same: although the uppermost layer of froth may have fizzled out, there’s still enough effervescence in the glass to hold off the worst worries until later. 

 

Reasons to Take Heart

Dealers may not have cleaned up at the 2022 edition of Art Basel Miami Beach the way they have in true boom years, but the succeeding months have reinforced that, for the most part, business was good enough to keep the wheel turning.  

Multiple collectors focused on different levels of the market told me that they have seen no discernible erosion in the overall mood between the first major market events of the new year and now. One Los Angeles-based advisor said that they sold more art in the first four months of 2023 than in the last six months of 2022.

Physical gallery expansions are still being announced at a steady clip, from Tribeca and Los Angeles, to London and Paris, to Asia and beyond. Rosters keep scaling up throughout the commercial hierarchy and across regions, too. Far more new spaces are forming than existing ones are shuttering. 

Subtler but no less important an indicator of the market’s health is that, when it comes to hiring, it’s an applicant’s market

“In London at least, good support staff are hard to get: people keep asking me if I know a good registrar, a good sales associate,” Morgan Long, managing director of the Fine Art Group, said. “That’s not what happens when things are bad. That’s a sign that business is happening.” 

What about the fairs? Every major expo slated for May and June, including the upcoming editions of Frieze New YorkIndependentTEFAF New York, and Art Basel, is returning with more exhibitors than its 2022 iteration. For every fair that died in the first quarter, a new one has sprouted up to take its place.

The consensus review of Christie’s and Sotheby’s upcoming offerings is that they’re generally strong and crowd-pleasing, despite lacking the sort of crown jewels in the collections of Paul Allen and other big-name, recently deceased patrons whose wares were auctioned last May and November. Recent auction cycles in London and Hong Kong showed no obvious vulnerabilities.  

Reasons to Stay Cautious 

Over the weekend, federal regulators seized struggling First Republic Bank and swiftly sold it off to JPMorgan Chase at a bargain price. First Republic is now the third regional U.S. bank to go down for the count this year, after Silicon Valley Bank and Signature Bank

Just as important, one of the main culprits behind these bank failures just got even more aggressive. The Federal Reserve raised interest rates another quarter-point on Wednesday, taking the target federal funds rate above five percent for the first time since 2007—a disorienting reversal from March 2022, when it hovered near zero. 

Ken Jacobs, chairman and CEO of investment bank Lazard, said on a recent earnings call that mergers-and-acquisitions activity had not been this subdued since 2012. The IPO market continued to slide, too: the number of companies to go public in the first quarter of 2023 was down 8 percent YOY, while the total cash they raised was down an unsettling 61 percent YOY, per Ernst and Young

But the S&P 500Nasdaq, and Dow Jones were all up YTD as of filing time. What’s more, old expectations about the wider economy’s relationship to the art economy may no longer apply.  

The Art Game’s Fundamental Change 

While the art market is still small in the grand scope of other industries, there’s no denying that the past 10 to 15 years have seen a significant expansion in the buyer base.  

Whether the primary motivator is a juicy return, social capital, or a quasi-religious pursuit of aesthetic transcendence, more wealthy people than ever are in the arena for establishment-approved artworks. The size of the buying audience will always be larger during clear market upswings, but its size in the 2020s dwarfs its equivalent at a similar point in the business cycle a generation ago. 

One consequence of this shift may be that the price floor at nearly every tier of the market has been raised for good. Even when market conditions suggest that the optimal move is to hunt bargains, there will be more opportunists pursuing those bargains than there used to be.

Which means that the bargains simply aren’t likely to get as cruel and offensive to the seller (and thus, as lucrative for the buyer) as they used to. 

And when market conditions seem decent-to-favorable? Try not to lose a limb in the frenzy. 

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The Bottom Line

Investors still appear to be wary of vulnerabilities in smaller American banks. The U.S.’s two major political parties are once again playing chicken with the country’s debt ceiling, raising the prospect that the nation could default by June 1 and upend the global financial picture. Stock market dips during auction week scare American bidders to a unique degree, Long of the Fine Art Group said. 

And yet, just because reasonable professionals can imagine something finally knocking the art world off its axis doesn’t make it any more likely to happen than last winter, or last fall, or last summer, or last spring—or whenever it was that you, personally, first heard someone you trust hedge on how much longer the good times (or at least the good-enough times) would keep rolling.  

Based on the evidence I’ve seen and the dynamics of this strange market we’ve created, the truly stunning question to mull at this point isn’t “When will the other shoe drop?” It’s “What if the worst of what we’ve been bracing for is already over?” 

 

[Read More]

 

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Paint Drippings

The latest Wet Paint tracks the gossip surrounding a slew of directorial moves at some of the country’s top institutions, and memorializes Public Access, former Marlborough director Leo Fitzpatrick’s project space on Henry Street.

Here’s what else made a mark around the industry since last Friday….

 

Art Fairs

  • Art Basel hired Maike Cruse, currently head of Berlin Gallery Weekend, as the inaugural director of its flagship Swiss fair effective July 1. (Artnet News)  
  • Eight large-scale Basquiat paintings commissioned by Emilio Mazzoli in 1982 are being reunited for the Fondation Beyeler’s upcoming show in Basel. The insurance value of the eight paintings is $800 million. (
  • The Armory Show announced the 225 galleries from over 35 countries that will exhibit at this September’s edition. David Zwirner‘s absence means the fair will feature zero mega-galleries, though ClearingLehmann Maupin, and Pilar Corrias will participate following a hiatus in recent years. ()   

Auction Houses

  • The  reported that Poly Auction intends to open offices in London and South Korea this year, and that China Guardian is also setting its sights on Western consignors of high-value contemporary art. However, when we tried to verify the story with Poly Auction Hong Kong, its publicist stressed that the house has long hoped to expand overseas “but [will] not this year,” and that nothing is set in stone. (
  • Sotheby’s is doubling down on its push to court NFT collectors and artists by adding a peer-to-peer secondary marketplace to its Web3-focused venture, Sotheby’s Metaverse, with all sales taking place fully on-chain. (Artnet News

Galleries

  • Gallerist Bill Brady died suddenly at age 55 this week. Artists, peers, and former employees shared memories of the dealer’s life and legacy.  (Artnet News
  • In roster news: 80-year-old minimalist/conceptual painter David Diao is now represented by Greene Naftali, after working with Postmasters gallery for nearly 40 years; L.A.-based artist Rosson Crow joined Miles McEnery Gallery in New York; and PPOW has taken over representation of fantastical painter Mosie Romney from Nicodim. (Observer, Wet Paint)

Institutions

  • Tate has named Karin Hindsbo the new director of Tate Modern starting in September 2023. The Danish curator will replace Frances Morris, who resigned at the end of last year after six years in the role. (Artnet News)
  • Eva Respini left her post as chief curator at the Institute of Contemporary Art Boston after eight years, and Ruth Erickson will succeed her in the role on June 1. Respini is expected to announce her next move in the coming weeks. ()
  • The Rauschenberg Foundation named former Sotheby’s executive Karen Sutton as its interim chief operating officer. The appointment should help fill any void left by Kathy Halbreich, who steps aside as the foundation’s executive director this month. () 

Tech and Legal News

  • Nathaniel Chastain, a former product manager at OpenSea, was convicted of money laundering and wire fraud in New York Federal Court this week in what has been called the first case of NFT insider trading. (Artnet News

 

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“Why would Christie’s have this auction and not tell people? It’s infuriating to me. I would never buy jewelry from this person. As a Jewish person and as a human being, I think it’s terrible.” 

Cathy Lasry, wife of billionaire financier Marc Lasry, on Christie’s initial reticence to publicize the Nazi roots of the Heidi Horten jewelry collection, which the house expects to sell for up to $150 million this month. Horten’s first husband, Helmut Horten, was a Nazi party member whose wealth came in no small part from the takeover of Jewish companies. Christie’s has since updated its documentation and pledged to donate “a significant contribution from its final proceeds” to an organization dedicated to Holocaust research and education. (Artnet News Pro

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Data Dip

Missing in Action

Data fro ProPublica. Visualization © 2023 Artnet Worldwide Corporation.

Data from ProPublica. Visualization © 2023 Artnet Worldwide Corporation.

The Met has absorbed plenty of heat over its antiquities collections lately, and a recent report by ProPublica turns up the temperature on a major gift of Native American works from New York collectors Charles and Valerie Diker. The dispute serves as a microcosm of how contemporary standards are complicating, if not endangering, the trade in ancient objects across regions…

  • Of the 139 works donated or loaned to the Met by the Dikers, investigators found that no more than 21 had “solid or complete ownership histories.”
  • The documentation gap means that only 15 percent of the works can be proven to be authentic pieces acquired legally and ethically. 
  • For comparison, the Museum of Northern Arizona, the Brooklyn Museum, and other U.S. institutions with large collections of Native American works maintain complete documentation on roughly 80 percent of their holdings.

In response to ProPublica, the Met stated that it is misleading to use “complete ownership histories as a standard for judging a collection,” and outlined multiple new measures it has undertaken since 2021 to strengthen its research efforts and tribal relationships.

The Dikers said in a statement that their acquisition strategy “has always centered on proceeding carefully, assessing all available information relating to provenance before acquiring a work, and welcoming new information should it come to light.”

No matter what, though, the burden of proof in the antiquities market has clearly shifted—and it’s highly unlikely to revert back to its old boundaries. 

[Read More]

 

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Thanks for joining us in the Back Room. See you next Friday.

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