Archive for November, 2008

Slow London auctions suggest Russian art frenzy is over (AFP)

Friday, November 28th, 2008 | Finance News

A disappointing week of Russian art sales here appears to have marked the end of a frenzied buying spree by collectors from the former Soviet Union, whose fortunes have diminished with the stock markets.

London's top auction houses failed to reach even their lower estimates in four days of sales of paintings, religious icons, rare books and other valuables -- although these levels were set before the financial crisis.

"The market is undergoing a correction, which can be blamed on the crisis," Alexis de Tiesenhausen, international director of the Russia department at Christie's auction house, told AFP after the sales ended Thursday.

"There is still an interest in Russia art -- the masters are still selling," he said, but predicted the market as a whole would decline by 20 percent.

Sotheby's sold 25.2 million pounds (30.3 million euros) of Russian art this week, well below the minimum estimate of 30 million pounds and the 38.6 million made this time last year. A third of lots were left unsold.

There was no absence of fur-clad blondes and Russian chatter at the auction house's New Bond Street auction room on Monday, but those attending the evening sale of Russian art appeared to have lost their enthusiasm.

Ivan Konstantinovich Aivazovsky's "View of Constantinople and the Bosphorus", estimated at 2.5 million pounds, failed to find a buyer.

The evening also saw the auctioneer, with an air of defeatism, sell "A Troika Leaving the Farmstead," an ink on paper work by an unknown artist, valued at between 2,000 and 3,000 pounds, for 13 pounds.

"It's boring, static," said one collector as he left the Sotheby's sale.

The story was the same at Christie's auction house, which sold 13.7 million pounds in its Russian sales this week. This is far removed from the record 44.9 million pounds garnered last November.

There were still a few success stories -- a painting by Natalia Goncharova, "Still Life with Watermelons", was the top seller over the four days, going for 1.55 million pounds.

Meanwhile, a "Reclining Nude" by her husband, Russian avant-garde artist Mikhail Larionov, fetched 1.38 million pounds, up from its lower estimate of 1.2 million pounds.

But the figures are far from those achieved in previous years, when the resources of Russia's oil and gas billionaires seemed unending, and the Rothschild Faberge egg could be sold at Christie's for nine million pounds.

Russian art, which barely existed for auction houses 10 years ago, has gone up by 90 percent worldwide in the past decade, according to the art insurer Hiscox.

But the Russian stock market has plummeted by 65 percent since the beginning of the year, taking many collectors' buying power with it.

"Given the current economic climate we are extremely pleased with the total achieved and have sold almost two thirds of the lots we offered for sale," Jo Vickery, head of Sotheby's Russia department, said nevertheless.

A collection of Faberge objects offered as presents from Russian Empress Maria Feodorovna to her younger sister, Princess Thyra of Denmark, passed their minimum estimated value and sold for 1.95 million pounds.


Asian economies stumble and U.S. faces retail test (Reuters)

Friday, November 28th, 2008 | Finance News

NEW YORK (Reuters) –
U.S. shoppers awoke early for post-Thanksgiving sales on Friday in a key test of the country's ability to withstand economic turmoil as sharp production declines in Asia gave fresh evidence of the global crisis.

Fighting wore on in India's commercial capital, Mumbai, where Islamist militants launched attacks on Wednesday, while unrest in Thailand also underlined the political risks facing emerging markets already grappling with economic disarray.

U.S. retailers opened early and offered steep discounts on the day after Thanksgiving known as "Black Friday," hoping for a strong start to a holiday shopping season that experts predict may be the worst since the early 1990s.

"If you don't get a good Black Friday start, you've got an awful lot of ground to make up," said Marshal Cohen, chief retail analyst with NPD Group.

In Europe, data showed inflation falling sharply and a steeper rise in unemployment than predicted -- factors that raise pressure on the European Central Bank to cut interest rates substantially next week.

The shake-up of European banks continued as the British government acquired a majority stake in Royal Bank of Scotland and Germany's Commerzbank accelerated its takeover of Dresdner Bank.

Chinese insurer Ping An provided a striking example of the turmoil's global nature when, a government source said, it asked China's government to help seek compensation from Belgium over losses in European financial group Fortis.

The worst economic woes in decades also took more casualties beyond the financial sector, as Franco-Italian chipmaker STMicroelectronics cut its fourth-quarter outlook and German industrial conglomerate ThyssenKrupp warned it does not expect to reach its long-term financial targets.

The U.S. benchmark Dow Jones industrial average closed 1.2 percent higher while other major U.S. indices rose as markets closed early for the holiday weekend. European shares also rose. Japan's Nikkei ended up 1.7 percent.


Many are looking for economic signals this weekend from the United States, where the crisis began with a collapse in the U.S. mortgage market that saddled banks throughout the world with bad debt.

Black Friday sales provide a strong gauge of consumer confidence, a major driver of the U.S. economy, as the run-up to Christmas nets up to 40 percent of retailers' annual sales.

Shoppers rose before dawn to peruse bargains at stores from Wal-Mart to Macy's Inc and Best Buy Co Inc, some opening at 4 a.m. (0900 GMT) to lure bargain hunters.

But store traffic appeared about 25 percent lighter than a year ago, a top retail analyst said. The Standard & Poor's Retail index fell 1.6 percent.

Consumers are cutting spending on nearly everything but necessities as they endure a housing slump, mounting job losses and the credit crunch.

"The recession is kicking in," said Tammy Williams, 36, as she waited to enter a New Jersey Kohl's Corp store. "I'm just looking for a bargain, anything to save a couple of dollars. I'll save the rest for food shopping."

Japan announced a fall of 3.1 percent in industrial output for October, more than expected. Household spending in the world's No. 2 economy also fell more than expected.


The Japanese data surprised economists and suggested the economy was in for a deeper and longer recession than earlier thought.

"Production is falling much faster than we had expected. Companies are adjusting their production very quickly," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research. "The auto makers are the worst hit, but their turmoil is starting to spill over to other sectors, such as steel."

South Korea, Asia's fourth-biggest economy, followed Japan's pattern in reporting a sharp drop in factory output in October, leading some analysts to expect a recession.

India, like China a major contributor to global economic growth in recent years, reported better than expected growth of 7.6 percent in the third quarter. But the economy lost momentum from the prior quarter's 7.9 percent growth and prospects were clouded by the Mumbai attacks.

Consumer price inflation in the Euro zone fell 1.1 percentage points, the biggest drop since the zone was created 10 years ago, to 2.1 percent year-on-year.

The continent's troubles were underscored in Sweden, which joined the growing number of nations officially in recession.

Reflecting the gloom over the auto industry from Detroit to Tokyo, a top executive at Honda Motor Co told Reuters Japan's No. 2 automaker faced a "Herculean task" meeting its already downgraded profit goals for this year.

(Additional writing by Ralph Boulton in London; Reporting by Reuters bureaus worldwide; Editing by Brian Moss)


Boeing engineers to decide on contract Monday (Reuters)

Friday, November 28th, 2008 | Finance News

NEW YORK (Reuters) –
The second-largest Boeing Co (BA.N) union will count votes on the latest contract offer from the plane maker on Monday.

The vote, by more than 20,000 members of the Society of Professional Engineering Employees in Aerospace (SPEEA), will also determine whether Boeing will suffer another strike at its Seattle-area plants, a month after its machinists returned to work after a 58-day strike.

SPEEA, the less-militant, white collar engineers' union is expected to approve Boeing's four-year work contract, which is backed by union negotiators.

The two sides reached a tentative deal two weeks ago, but the contract must be approved by a simple majority in a postal ballot.

Two contracts are at stake. The first covers 13,898 Boeing engineers and the second covers 6,576 technical workers. The vast majority work at Boeing's Seattle-area plants, but some are also located in Oregon, Utah and California. Both contracts are set to expire on December 1.

In addition to voting to accept or reject the offers for new contracts, SPEEA members will also vote on strike authorization, which would give union negotiators authority to call a strike if backed by a simple majority.

That outcome is unlikely. SPEEA has struck Boeing only twice since organizing in 1946: for one day on January 19, 1993 and a 40-day strike in February and March of 2000.

Boeing is still trying to get its production lines up to speed after the recent strike by the 27,000 members of the International Association of Machinists and Aerospace Workers (IAM) ended November 2.

The company is expected to announce a new aircraft delivery schedule, taking into account the IAM strike and other production problems, some time in December.

(Reporting by Bill Rigby; Editing by Tim Dobbyn)