economics

Cock-a-lickin’ in the water by the blue bayou

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The value of the art market, which actually hasn’t changed that much over the past 10 years or so, is in the region of $60 billion a year, which sounds like a lot, but actually compared to other industries is not that huge. It hasn’t shifted very much in the last 10 years, but what has changed is the composition of the figure, with the top end much stronger and the middle weaker. […]

There is a concentration on about 25 artists in the art market. Studies (which I cite in my book) have shown that whether we are talking about the impressionists, postwar and contemporary art sales, the highest prices are concentrated on just a few artists. […]

you need to distinguish here between private museums that belong to a very rich person, a billionaire generally these days, and a state museum. In America, a museum like MOCA or LACMA is, in theory, a private museum, and they get their funding from donors on the whole, although they sometimes get it from the local municipality as well, so it’s not a hard and fast distinction, but it’s still worth considering who is behind a given institution.

What has definitely driven the contemporary art market has been the phenomenal growth of private museums who all concentrate on the same contemporary art basically.

{ Five Books | Continue reading }

oilstick on paper { Jean-Michel Basquiat, Action comics , 1986–1987 }

‘If it ain’t broke, don’t fix it.’ –Ronald Reagan

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“What are the odds, if everything is random?” Wang wondered.

In a new paper, Wang investigates whether “hot-streak” periods are more than just a lucky coincidence. […]

Looking at the career histories of thousands of scientists, artists, and film directors, the team found evidence that hot streaks are both real and ubiquitous, with virtually everyone experiencing one at some point in their career. While the timing of an individual’s greatest successes is indeed random, their top hits are highly likely to appear in close proximity. […]

“If we know where your best work is, then we know very well where your second-best work is, and your third,” he says, “because they’re just around the corner.”

{ Kellogg School of Management | Continue reading }

Pikes clash on cuirasses. Thieves rob the slain.

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The ATM-busting technique, known as jackpotting, has been around for almost a decade […] ATM jackpotting is both riskier and more complicated than card-skimming. For starters, scammers have to hack into the computer that governs the cash dispenser, which usually involves physically breaking into the machine itself; once they’re in, they install malware that tells the ATM to release all of its cash, just like a jackpot at a slot machine. These obstacles mean the process takes quite a bit longer than installing a card skimmer, which means more time in front of the ATM’s security cameras and jackpotters triggering an alarm in the bank’s control center at every step. But as chip-and-PIN becomes the standard in the U.S., would-be ATM thieves are running out of other options. […]

It was the Secret Service’s financial crimes division that spotted the series of attacks on multiple locations of the same bank in Florida in December and January, and put out a bulletin to financial institutions, law enforcement, and the public about the new style of ATM theft. The two major global ATM manufacturers, Diebold Nixdorfand NCR, also alerted the public and issued security patches within a few days. Banks started monitoring their ATMs around the clock. Less than 24 hours after the Secret Service’s public alert, Citizens Financial Group, a regional bank with branches all over the northeast, notified the local police that its security folks noticed one of its ATMs go off line. The police contacted the Secret Service, which made its first arrest on the scene.

{ Bloomberg | Continue reading }

photo { Jerome Liebling, Union Square, New York City, 1948 }

What’s in the wind, I wonder

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In 1985, Tony Schwartz, a writer for New York magazine, was sitting in Donald Trump’s office in Trump Tower interviewing him for a story. Trump told him he had agreed to write a book for Random House. “Well, if you’re going to write a book,” Schwartz said, recalling this interaction in a speech he gave last fall at the University of Michigan, “you ought to call it The Art of the Deal.”

“I like that,” Trump said. “Do you want to write it?”

These sorts of arrangements typically are not that generous for the writer. “Most writers for hire receive a flat fee, or a relatively modest percentage of any money the book earns,” Schwartz said in the speech. Schwartz, by contrast, got from Trump an almost unheard-of half of the $500,000 advance from Random House and also half of the royalties. And it didn’t even take a lot of haggling.

“He basically just agreed,” Schwartz told me in an email, meaning Schwartz ever since has brought in millions of dollars more of royalties and Trump has brought in millions of dollars less.

It’s a telling example, Harvard Business School negotiating professor Deepak Malhotra said in a recent interview. “What should have been a great deal on a book about negotiation actually is one of the most interesting pieces of evidence that he’s not a good negotiator.” Malhotra pointed out Schwartz even got his name on the cover, and in same-sized text. “I don’t think there’s a better ghostwriting deal out there.”

[…]

Trump made $50,000 an episode in the first season. In the second season? “He wanted a million dollars an episode,” Jeff Zucker, the current boss of CNN and former head of NBC, told the New Yorker’s David Remnick last year. And what did Zucker give him? “Sixty thousand dollars,” Zucker said.

“We ended up paying him what we wanted to pay him.”

{ Politico | Continue reading }

brush and india ink on paper { Roy Lichtenstein, Donald Duck, 1958 }

You know I hopped into my car, didn’t get very far

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On Thursday, AT&T unveiled a service called WatchTV, a “skinny bundle” of 31 television channels, many of them under AT&T’s control after the Time Warner merger, as well as on-demand content from those channels. Subscribers to AT&T’s two new unlimited data plans get WatchTV for free, and the pricier plan includes HBO, the crown jewel of the Time Warner merger. Non-AT&T customers who want WatchTV can get it for $15 per month—but without access to John Oliver and Silicon Valley, which would cost another $15 through HBO Now. […]

Growth through acquisition is how Google and Facebook became so dominant in their respective markets. Facebook has a tool called Onavo that identifies the user bases of rival social networks so it can buy them up if they start to take off. Google bought its ad network by acquiring Doubleclick, AdMob, and other firms.

{ New Republic | Continue reading }

‘Not necessity, not desire, the love of power is the demon of men. Let them have everything, they remain unhappy.’ –Nietzsche

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{ while ordinary people are struggling, those at the top are doing just fine. Income and wealth inequality have shot up. The top 1% of Americans command nearly twice the amount of income as the bottom 50%. The situation is more equitable in Europe, though the top 1% have had a good few decades. | The Economist | full story }

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{ Netflix performance burns hedge fund short sellers }

Yes, tid. There’s where.

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Twelve years ago, my now-Bloomberg colleague Joe Weisenthal proposed that startups that planned to disrupt an established industry should short the stock of the incumbents in that industry. That way, if they were right — if they were able to undercut big established public companies — then they’d get rich as those public companies declined. […] Their profits would come from the incumbents’ shrinking.

Weisenthal’s proposal was for disruptors offering a free product; the idea was that the entire business model would consist of (1) offering a free service that public companies offer for money and (2) paying for the service by shorting the public companies. But there’s a more boring and more widely generalizable — yet still vanishingly rare — version of this approach in which it just augments the disruptors’ business model: You sell better widgets cheaper and make a profit that way, while doubling down by also shorting your competitors. It’s a more leveraged way to do the business you were going to do anyway, an extra vote of confidence in yourself.

{ Bloomberg | Continue reading }

The boots to them, them in the bar, them barmaids came

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It is often claimed that negative events carry a larger weight than positive events. Loss aversion is the manifestation of this argument in monetary outcomes. In this review, we examine early studies of the utility function of gains and losses, and in particular the original evidence for loss aversion reported by Kahneman and Tversky (Econometrica  47:263–291, 1979). We suggest that loss aversion proponents have over-interpreted these findings.

{ Psychological Research | Continue reading }

Let me have men about me that are fat

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2017 was a big year for Norway’s sovereign wealth fund, already the largest in the world. After surpassing $1 trillion in assets, the fund announced today that it made an annual return of 1,028 billion kroner ($131 billion), the largest amount in the fund’s 20-year history. […]

how many stocks this fund already owns: 1.4% of all listed stocks in the world […] its biggest boost last year came from Apple. It has a 0.9% stake in the US tech company […]

The fund has now made more money in investment returns than was put into it […] since inception in 1997

{ Quartz | Continue reading }

art { Jan van Eyck, The Arnolfini Portrait, 1434 }

Olympic gold medals contain only 1% gold — would cost $25,000 if pure

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You know, someone invented the XIV ETN. And someone invented the VIX, and VIX futures. And when you read the technical specifications for all of those things, it is clear that they are not trivial feats of engineering. Teams of marketers and traders and quants and technologists and lawyers put many hours into getting them just right, so that they would work as intended. They are technologies, highly engineered tools designed to help customers do things that they couldn’t have done before. They are financial technologies, built not out of screens and circuit boards but out of formulas and hedging strategies and legal documents, but that is what you’d expect: Financial firms ought to innovate in financial technology.

Yesterday Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein presented at the Credit Suisse Financial Services Conference, and his presentation is kind of a weird read. The running theme is that Goldman is doing technology stuff to win business. “Engineering underpins our growth initiatives,” says a summary page, and it doesn’t mean financial engineering. In fixed income, currencies and commodities, engineers are 25 percent of headcount, and the presentation touts growth in Marquee (its client-facing software platform) and “systematic market making.” In equities, Goldman touts its quant relationships. In consumer banking (now a thing!), the centerpiece is Marcus, Goldman’s online savings and lending platform. And in investment banking, “Engineering enhances client engagement through apps, machine learning and big data analytics.” […]

Instead of developing new financial technologies, Goldman is developing new computer technologies for its financial clients.

{ Bloomberg | Continue reading }

related { Hedge-fund mediocrity is the best magic trick. Never have so many investors paid so much for such uninspiring returns. }

lithograph { Ellsworth Kelly, Camellia III, 1964–65 }

Tee the tootal of the fluid hang the twoddle of the fuddled, O!

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Of all the criticisms aimed at fracking, charges that it might increase the incidence of STDs – specifically gonorrhea – are seldom heard.

Yet there might be a link – according to a new research paper published in the Journal of Public Health Policy. […]

We find that fracking activity is associated with a 20 per cent increase in gonorrhea.

{ Improbable | Continue reading }

The cess of majesty dies not alone

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Often, damaged works of art end up in the vaults of insurance companies. Once the owner submits a claim on the damaged piece, a team of experts, appraisers, conservators and adjusters offer specialist advice on the artwork’s condition and devaluation. The economics of selling and repairing the work are weighed up, and generally, if the cost of restoring a work is far beyond what it is worth, the work will be claimed as “total loss”. The insurance company will pay out on the policy and, in exchange, retain the broken piece. The “total loss” artwork is effectively declared worthless, unsalvageable by both insurer and owner. From then on it belongs to the insurance company as salvage.

Some of these pieces, though, end up being exhibited by the Salvage Art Institute (SAI), which calls itself a “haven” for written-off works. Conceived by Elka Krajewska, an artist in New York, in 2009 during a chance meeting with a representative of AXA Art Insurance, it took her until 2012 to jump through enough legal hoops to persuade the insurer to donate some of their total-loss works to the SAI. A selection of these works is now on show in “No Longer Art”, a show at BNKR Space, a gallery in Munich.

{ The Economist/1843 | Continue reading }

welded steel, porcelain, wire mesh, canvas, grommets, and wire { Lee Bontecou, Untitled, 1980–98 }