Its mid-May performance was nothing to scream about, so Sotheby's didn't take any chances at last night's contemporary art auction in London. Three works by pop art king Andy Warhol moved for $10.5 million, accounting for 25 percent of the $42 million in sales. In all, 40 lots came under the gavel and came in just under the high estimate of $45 million. A surprisingly high 92.5 percent of works found buyers.

This year's London results for Sotheby's are off 73 percent from the late June 2008 contemporary art auction, indicating that low expectations played a role in last night's success. The average price last year was around $2.2 million, dropping this year by 48 percent as a result of a protracted art market recession. Well, Tobias Meyer, worldwide head of contemporary art for Sotheby's calls it "a performing transitional market," but you know what that means.

If the latest results tell us anything, it's that death is the cure for dying. An ailing art market is now showing signs of life thanks to the dead guys whose art continues to be in demand. Earlier auctions focused on lower cost, less prominent, "cutting edge" artists as an attempt to get collectors to open their wallets in smaller increments. Now, we're looking at a possible flight to quality. Ninety percent of the pieces auctioned had been under the hammer before.

So, is there any meaning in today's art market? Eh, maybe. It's schismatic. It's fun. And, at least it gives bloggers something to write about.

Nobody can find a trace of the good vibes from the May contemporary art auction at Christie's. London art sales are off an estimated 70 percent this month from a year ago. The amount of top-shelf lots being offered has fallen precipitously. Auction house price guarantees are little more than a quaint novelty – this last bit spells continued heartache for the beleaguered art market.

So, if you're looking for Pablo Picasso, Francis Bacon or Richard Prince, you're more likely to find them in a museum than under the gavel.

The lack of price guarantees has been particularly problematic for the art market. Without that fallback position, collectors are withholding their pieces from auction, instead pursuing private sales ... or simply continuing to hold the pieces. It follows traditional investment strategy. Would you buy high and sell low? The same thinking applies to the art market.

Last year, six works were guaranteed and sold for more than $20 million. This year, nothing is expected to cross that threshold at auction. Both Sotheby's and Christie's have shrunk their catalogues by 10 percent and are even using these auction marketing tools to promote their private sale departments.

All of this sets the stage for the upcoming Impressionist auctions at Christie's (June 23, 2009) and Sotheby's (June 24, 2009). Estimates are low, with the former at $62 million and the latter at $44 million. Last year's estimates were well over twice this year's. On the June 25, 2009, Sotheby's will hold a contemporary auction and expects to pull in a mere $31 million, down more than two-thirds. The Christie's contemporary auction on June 30, 2009 is estimated at $29 million, down 78 percent from last year's estimate. There won't be as many works from the masters coming to market, thanks to the absence of guarantees.

Looking for a cool piece by Lucian Freud? Try MoMA.

"Alexander watching Apelles painting Campaspe," a long-lost work by French artist Jacques-Louis David is set to go under the gavel at Sotheby's on July 8. The piece was unveiled publicly for the first time in 84 years yesterday in New York in anticipation of the London auction next month. At the Old Master Drawings sale, David's work is expected to go for approximately $1.2 million.

David did not produce many elaborate drawings on the scale of "Alexander," which will put the ultimate winner in exclusive company. The work was originally given by David to Baron Gros, his favorite student, in 1820. Since then, it has only been held in private collections, with no public visibility.

Hoping to draw some momentum from the recent success at Christie's – and the auctioning of this unique piece, Sotheby's expects a strong showing at the London auction.

France's esteemed Chateau Cheval Blanc is auctioning off rare vintages right from the cellar through Sotheby's next month. On June 17 at Sotheby's London, collectors can get their hands on over 1,000 bottles from nearly a century of vintages including the 1921, 1928, 1947 and 1949 being sold by the chateau. Each comes in an original wooden case. Older vintages (1900 to 1976 )were recently re-labelled and re-capsuled at Cheval Blanc. Some of the older bottles have been recorked and sometimes topped up with a wine of the same vintage over the past few decades. Serena Sutcliffe MW, International Head of Wine at Sotheby's, is quoted in the press release as sayiing: "We are honoured to be offering this unique collection of Cheval Blanc that has never before left the cellars at the Château. Cheval Blanc is a wine like no other. It has opulence, finesse and enormous originality."

The various lots includes a number of verticals including one of over 30 bottles covering 60 years from 1905
that is estimated at £15,000 – 20,000. Château Cheval Blanc dates from 1832 when the first part of what is now the Cheval Blanc estate was acquired from the Figeac estate. The won medals in the London and Paris International Exhibitions in 1862 and 1867 that are still displayed on the labels today. Château Cheval Blanc is one of only two St Emilion Châteaux to be awarded the top Class A classification. No matter what the economy may be doing, I suspect wine collectors will be coming out of the woodwork for this one.

Villa Leopolda in Cap Ferrat (above), once the world's most expensive estate with a $750 million pricetag, may now only be worth $40 - $50 million thanks to plunging prices in the wake of the global recession, according to Sotheby's International Realty CEO Alexander V. G. Kraft. "For trophy properties it used to be a question of how much someone was willing to pay," Kraft tells the London Telegraph. "They would come quietly onto the market – they would be marketed under the table. This system really has totally collapsed. Buyers willing to pay anything like those sums just don't exist anymore." The paper says "panic sales" are on the rise in the ritzy area.

As we wrote about back in February, Russia's richest man Mikhail Prokhorov had reportedly agreed to purchase the Villa for $750 million but later backed out of the deal, forfeiting a $55 million deposit. The estate has not been re-listed. "Prices are coming more in line with the rest of the market," Kraft declares. "Trophy properties will be more in line with 'normal luxury properties' – about 20 to 30 million [euros]." Peter Ilovsky, director of Sotheby's International Realty in Cap Ferrat, says they're still good investments however. "Owning a property in Cap Ferrat is like having a Picasso," he tells the paper. "It's certainly better than placing the money in a Swiss bank."

Contemporary art may not have done much for Sotheby's this spring but a day of tribal art sales brought some good news. "The Sculptor's Eye: African and Oceanic Art from the Renee and Chaim Gross Foundation" brought in $4,888,316 against an estimate of $3 million to $4.4 million with most of the lots selling. The sales proceeds benefit the foundation and Mimi Gross, the daughter of the sculptor and current head of the foundation said that she was pleased with the results.

The same afternoon the house's sale of African, Oceanic and Pre-Columbian art brought in $5.7 million against expectations of $4.3 million to $6.4 million. The session included pieces from the collection of John Friede, whose 4,000-piece collection of Oceanic art is supposed to head to the de Young Museum in San Francisco, but has been delayed by a lawsuit and a debt of $25 million he owes to Sotheby's. Sotheby's has taken possession of 54 objects and sold six of them in the sale for a total of $2,393,500. More details are available at ArtInfo.

The piece shown above, a Fang-Betsi reliquary head from Gabon had an estimate of $200,000-$300,000 but sold for $506,500.

Masterful works by Helmut Newton and Peter Beard star in Sotheby's Photographs sale in London on Tuesday. Prices have come down from their pre-crash levels so no doubt many of the lots will seem like relative bargains when the market recovers. The sale's highlight is Newton's sexy Mannequins Quai D'Orsay, Paris, 1977 (above), estimated at about $18,000 - $27,000. Also on offer is his Winnie at the Negresco, Nice, 1975, est. at about $9,000 - $12,000. Among the Beard works in the sale are Cheetah Cub Orphans in Mweiga, 1968, est. at about $22,000 - $30,000, and From 'The End of the Game', 1964, est. at about $15,000 - $23,000.

Christie's fought the trend and walked away with close to $94 million. Naysayers stand shocked (I'll admit it; I'm among them). This is still far from the record-setting years leading up to the current financial crisis, but only the truly stubborn would not recognize the accomplishment of coming close to the upper end of the auction house's estimate, particularly a day after competitor Sotheby's turned in such a dismal performance.

The initial estimate for Christie's Post-War and Contemporary Evening Sale was $71.5 million to $104.5 million. Forty-nine of the 54 available lots were sold – a sales rate of 91 percent by lot and 94 percent by value. This easily tops the 81 percent by lot that Sotheby's hit (en route to a paltry $47 million). Thirty of the lots sold for more than $1 million each, and nine raked in more than $3 million a piece.

If you want to be negative, though, you still have plenty of ammo. Back in November, Christie's achieved a $113.6 million take with a sale rate of only 68 percent (by lot). A year ago, the auction house pulled in $331.4 million at a sale rate of 95 percent.

But, last May doesn't count. That was a last hurrah, of sorts, and most in the art community realized it, even if they wouldn't concede the obvious.

At last night's contemporary art auction, Sotheby's brought in a meager $47 million – down 87 percent from last year's record of $315 million. The auction house wasn't even able to reach its low estimate for this year of $51.8million. Need some perspective? Last year's Francis Bacon triptych sold for 84 percent more (at $86.3 million) than all the lots purchased at last night's event.

The top sale last night was a blue and pink egg by Jeff Koons, measuring seven feet in width. At $5.5 million, it didn't even reach its estimate, which ranged from $6 million to $8 million. Last June, his pink "Balloon Flower (Magenta)" went for $25.7 million at a Christie's auction in London. Interestingly, art dealer Larry Gagosian was the buyer, though it's unclear if he bought it for himself or a client. Gagosian sold the egg back in 2004.

In general, buyers were in short supply, with most bidders choosing to remain on the sidelines. But, there is a sense that good works sold at fair prices ... unless you were one of the sellers, I imagine. Art market analysts, dealers and critics sought to find a silver lining, calling successes what would have been failures in previous years (such as the Koons egg price).

The shrinking pool of buyers reflected the artwork available. The number of lots offered at Sotheby's last night was down 42 percent, from 48 to 83. Only 81 percent – 39 – were sold.

Tonight, it's Christie's turn. Fifty-four contemporary pieces are set to come under the gavel, with total estimates ranging from $71.5 million to $104.5 million (not including commissions).

The only fingers not crossed, most likely, belong to bargain-hunters.

Economic conditions aren't so dismal that records can't be set. Sotheby's just moved a flawless, rare blue diamond for nearly $9.5 million – proving that taste can prevail even when wallets are generally gripped shut.

The rectangular blue diamond weighs 7.03 carats and sold at the highest price per carat ever fetched at auction – a whopping $1,349,752 (including the commission to Sotheby's). It's also the most paid for a "fancy vivid blue diamond" ... I didn't realize that such records were tracked. The winner chose to remain anonymous (can you blame him or her?) who was bidding by phone. The auctioned ended with a veritable telephonic battle that lasted 15 minutes.

The record until the blue diamond went under the gavel was $7.9 million for 6.04 carats. It was set in October 2007 in Hong Kong. Sotheby's sold the last record-breaker, as well.

In all, the auction house moved $35.7 million in gems and jewelry from 266 lots – not counting another 80 that didn't sell.

David Bennett, the chairman of Sotheby's jewelry department covering Europe and the Middle East, remarked, "It is fantastic in this market and shows that these rare things are very much in demand."

No, David. What's fantastic is that such items are in demand and that people are still willing to pay for them!

Sotheby's is hoping for a big score in its upcoming New York sales but bad news hit the auction house earlier in the day when it was downgraded by Standard & Poor's. The auction house saw its corporate rating reduced to a BB-minus as a result of the decrease in the global demand for art. S&P said that it believes more bad news is to come and that revenues will drop substantially. It laid the blame at Sotheby's feet for offering guarantees to so many sellers over the past year. Although, in Sotheby's defense, it should be said that no one predicted that the art market and the global economy would fall off a cliff. In many cases guarantees are necessary to make sure that an auction house gets a piece and when there are several offers on the table it's tempting not to want to write a check to secure the plum painting for your auctions.

Is this view of the art market apt? The upcoming sales should answer that but there have been some bright spots over the last couple months. Sales of the belongings of Yves St. Laurent and Gianni Versace both beat estimates. The economy also seems to be chugging toward a slow recovery. But tonight's results seem to bear out he S&P's estimation. The big lots of the evening, a Picasso and Giacometti's cat sculpture shown above failed to sell. Both were expected to bring in between $16 and $24 million each but did not reach their reserve level.

Sotheby's new status will reduce its financial flexibility and it may have to pay increased interest to its lenders.

Art auction houses are looking to protect themselves. Lacking a local "enforcer" to find once eager collectors and shake them down for every last dollar, the likes of Sotheby's and Christie's will spend the coming fortnight managing expectations while trying to eke out a living. Atop the agenda this season is the notion of protecting price levels for Impressionist, modern and contemporary pieces.

Reality has struck.

Sotheby's has revealed a sales target of $179 million to $256 million for the spring. Last fall, the auction house hit $411 million – which is paltry compared to the $742 million take at this time last year. The showpiece now is "Baroque Egg with Bow," a sculpture by Jeff Koons, which carries a Sotheby's estimate of $6 million. While this sounds rich for today's market, the house almost quadrupled that amount with a sculpture from the same artist in 2007.

For those who haven't been keeping score, 2007 for the art world was like 1999 for technology people.

By reinforcing concern through modest estimates and carefully selected lots, the major (and smaller auction houses) are subtly positioning themselves for any unexpected support. A strong spring auction – as measured by current economic conditions – could cause global art market confidence to rebound. A turn for the worse, however, would be exacerbated by already depressed hopes.

"Russian" and "art" together used to mean "stratospheric prices paid." Not any more. Last week's Russian art auction results at Christie's and Sotheby''s showed the difference a year can make. Last year, the two houses brought in $64 million at the New York-based annual ritual. This year, the final take was only $27 million.

At the Christie's auction, the top-selling piece was Svetoslav Roerich's "Portrait of Nicholas Roerich in a Tibetan Robe" for $2.9 million – thus accounting for more than 10 percent of both houses' sales. It set a record for works by Roerich. The next best was by Nicholas Roerich himself. "The Greatest and Holiest of Tangla," a landscape of Tibetan snowcaps, brought in $1.4 million.

Efforts to repatriate Russian art, of which I first learned from Annika Larres at the Bukowskis auction house in Helsinki, seem to have slowed, due in large part to the loss of so many Russian billionaires over the past twelve months.

Overall, Christie's moved 69 percent of the 390 lots available for $13.2 million. The father/son Roerich team accounted for a third of that. The Sotheby's auction, last Wednesday, was good for $13.8 million, compared to $46.5 million in 2008.

The real estate market in Aspen, CO has recovered somewhat and its priciest zip code is now the most expensive neighborhood in the U.S., according to a new ranking by Forbes. Back in February we reported on the dire straits of Aspen real estate, when Sotheby's International Realty shuttered its Aspen office in the wake of plummeting sales. Now Aspen's south end 81611 zip code, home to ultra-luxe ski lodges, is top of the field with an impressive $6.5 million median home sale price, the magazine reports. However the seasonal nature of the Aspen market gives it a yearly boost which might well mean its triumph is temporary; and indeed the big picture is still pretty glum. "In 2007, the market in our valley was $2 billion in sales," top Aspen broker Steve Walker tells Forbes, "this year it'll be between $500 million and $1 billion. In volume and dollars, it's been a 50% drop."

We predict that Beverly Hills, which is currently in 3rd place, will quickly eclipse Aspen especially since a mansion was just sold there for $31.5 million, the most expensive property sold in California so far this year, while a second recently changed hands for $22 million. The former, a 27,000-sq.-ft. Norman-style estate on 2 acres with 10 bedrooms, 14 baths and seven fireplaces, had originally been listed at $45 million and was on the market for almost nine months. Aspen's neighboring Snowmass Village has also experienced a resurgence. Other neighborhoods that have clocked recent gains include the Hollywood Hills and Chappaqua, NY, while the second most expensive zip belongs to Alpine, NJ, a luxurious New York suburb home to Wall Street execs and rap moguls like Sean Combs and Damon Dash.

Want to live in the country's priciest zip? There are several choice Aspen properties available including this $60 million estate, this $58 million spread and this cozy $43.8 million ski lodge. Here's the new list of the top five most expensive zip codes in the U.S. as determined by median prices (which are quite high overall right now at the top end):

1. Aspen, CO, 81611: $6.5 million
2. Alpine, NJ, 07620: $4.7 million
3. Beverly Hills, CA, 90210: $4.04 million
4. Snowmass Village, CO, 81654: $3.99 million
5. Newport, CA, 92661: $3.9 million

One client is putting up a third of the take at the Christie's wine auction this weekend. A total of 613 lots are available, with one party accounting for than 200 of them. This seller is described only as a "wealthy New York family" (duh). For collectors, according to the auction house's spin, this is a great time to buy. Prices are falling, which means that there are plenty of bargains out there.

Apparently, there's some wisdom to this perspective. At the Sotheby's auction last weekend, bidders dropped more than $2.9 million on vino, thrashing a pre-auction estimate of only $1.8 million to $2.6 million. New buyers are coming into the market. At the Sotheby's auction, more than 20 percent of the bidders were new. Two weeks before that, Hart Davis Hart, of Chicago, moved nearly $2.7 million of liquid bliss, beating its presale mark of $2.4 million.

In a Reuters interview, wine consultant Judy Beardsall likens wine collecting and investing to gardening, "At a time like this, it's a chance to turn over the soil in the garden, put down some stock for the next generation."

But, if you aren't interested in waiting, all the wines put up for auction are fit for consumption ... for a price.