Wilbur Ross On Art 'Bubble And Emerging Market Idea [VIDEO] - Hedge Fund Alpha (formerly ValueWalk Premium)

Wilbur Ross On Art 'Bubble And Emerging Market Idea [VIDEO]

Wilbur Ross, WL Ross & Co. chairman and CEO, explains why he thinks people are putting their money into art. He says he “has been sucked in by the fad.”

Wilbur Ross videos and transcript below

wilbur, you talked about the bifurcated economy before. and one of the things i wanted to raise was what’s going on in the art market. which i’ve heard you describe as the new gold. what are you saying? well, i do think things are getting a little bit extreme. and it’s a combination of people running away from paper money. when you think about it, if someone is really wealthy and has a lot of cash, what are the alternatives? everybody’s scared to death of short-term fixed income because it yields nothing. people know that long-term bonds have extreme downside when quantitative easing ends. so where do you go? i think a lot of people are putting it into art. and that’s being compounded by the fact that certain countries, are spending literally billions of dollars developing what will be true world class museums. and so they’re driving up the prices enormously. yeah, in fact, wilbur, hey, it’s brian. i don’t know if you saw this but a case of 1978 — i’ve never had a bottom of it — sold in china for $474,000 in china over the weekend. that’s not just wine, is it? in some cases it seems to me that there’s a stupid rush into some of these quote, unquote assets. i don’t think i have clothes good enough to wear while i’m drinking $400,000 wine. just save it. it might be for trading rather than for drinking. are you buying art? just to clarify? well, yeah. i guess i’ve been sucked in by the fad. we collect chinese contemporary and western surrealist paintings and we’ve been doing that for quite a while. not because — not because you believe that with the dollar is going to zero? no, no, no, just that we very much love surrealism. and i think if you’re investing in distressed companies, what could be more appropriate form of art than surrealism?

at lpg is liquefied petroleum gas. and it forms the feed stock for all kinds of plastics, chemicals and fertilizers. all of which are very much in demand in the emerging markets. and what’s happening is that a lot of the production of these materials had been in europe and had been based on — now lpg is about half the cost of naptha. so that production is shifting to lpg and then will be reexported as finished product. so it’s very much a play on the rising standards of living in the emerging countries coupled with a play on the shale gas phenomenon in the u.s. so give me a little prediction on what you think the fed is going to do when it comes to tapering and whether you think that will impact the emerging markets given what you thought would happen when there was even talk of it. right. well, the emerging markets are much thinner markets than we have in the developed world. they therefore tend to be much more volatile. they also of the other variable of currency flows. hot money in and out. so that’s why changes in interest rate are particularly destabilizing to those markets. but i think janet yellen is relatively unlikely to do any kind of a precipitous move in easing quantitative easing. it wasn’t too many months ago when she voiced an opinion that perhaps we needed more quantitative easing rather than less. so i believe if she does anything near term, it’ll be very, very gradual. maybe as little as $5 billion a month of tapering which would eliminate the qe over a very gradual 17-month period. i think preannouncing such a gradual glide chorus would offset the concern of the reduction in qe.


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