Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street, warns that the art and real-estate markets “are signs that asset prices, broadly speaking, are getting toppy, as if rising geopolitical risks, rising interest rates and weak global growth isn't enough to worry about.”
“While a Modigliani nude sold for $170 million at Christie's Monday night, the second highest price ever paid at an art auction, recent sales at Sotheby's have been disappointing, a sign that the once red-hot art market may be cooling," he wrote for CNBC.com
"Indeed, despite the eye-popping price for the Modigliani nude, prices at Christie's auction were quite volatile as art buyers, becoming increasingly selective, left some important works on the shelf,” he wrote.
“Shares of Sotheby's have been volatile as well, falling from their most recent 52-week high of over $47 a share to just over $32 on Monday, reflecting a disappointing auction season thus far,” he said.
“I watch the art market as an impressionistic indicator of market froth … as we have seen in recent market cycles, when prices peak, and then weaken, it is time to van Gogh!,” he said.
“Similarly, we are beginning to see evidence of toppiness in both the residential and commercial real estate markets in the hottest areas of the country. Real estate can top out and lead to trouble in other markets, particularly if interest rates begin to rise.”
But others don't see many bumps in the financial and economic path ahead.
Federal Reserve Vice Chairman Stanley Fischer said he doesn’t see immediate risks of financial bubbles in the U.S., while raising concerns that the central bank’s policy tool kit to deal with such occurrences is limited and untested, Bloomberg reported.
“Banks are well capitalized and have sizable liquidity buffers, the housing market is not overheated and borrowing by households and businesses has only begun to pick up after years of decline or very slow growth,” the Fed’s No. 2 policy maker said last month.
Still, he warned that “potential shifts of activity away from more regulated to less regulated institutions could lead to new risks.”
(Newsmax wire services contributed to this report).
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