SDC Weekly 82; Psychology of Habits; All About Time Itself; On Being Weird
Trumponomics, LV’s T’s & C’s, On Hodinkeee and Founder's Failures, New CEO at Laurent Ferrier, Time+Tide Sets Sights on Manhattan, Ming Matures and more.
🚨 Welcome to SDC Weekly 82!
Estimated reading time: ~40 mins
I guess everyone’s talking about DeepSeek after it caused a huge dip in major tech shares this week. I had included some links about it, but on reflection, I decided to add some commentary on this as a last minute brain fart. YMMV.
This was where the original newsletter had started, so I won’t change it! The afterthoughts on Ben Clymer’s podcast saga from the previous week, ended up generating another huge response - somewhat unsurprising, given my previous experiences with discussing watch media ethics always generated decent engagement. Anyway, we will touch on more industry developments today, but what’s more exciting is the other topics which go beyond the usual ‘market’ related chat.
Today we will examine some of the neuroscience behind collecting habits, and then we will run through through the complexities of measuring time itself. If you think a perpetual calendar is complicated, wait until you learn why we needed one in the first place!
—
If you’re new to SDC, welcome! It’s great to have you here, and if you have time, check out the older editions of SDC Weekly here.
Trumponomics
Last week I read this article by Brendan Cunningham about Trumponomics and the new president’s potential impact on the watch market; worth a read before you continue (~5 min max). I thought it was a great topic, and I think there’s even more to explore here - particularly given the broader global context we find ourselves in.
Headwinds
Beyond Cunningham’s headwinds, I’d add:
Growing wealth inequality concerns could lead to luxury tax initiatives in major markets. One example in the UK recently; they added 20% VAT to private school fees, because ‘only rich can afford private schools, so they can of course afford to pay more’ - talk about moronic policy makers! If they can whack such random taxes on positive aspects of life, why not luxury goods?
Environmental regulations might impact manufacturing and shipping costs. Trump may love drilling and hate the Paris agreement, but the rest of the world isn’t aligned with him - couple that with Trump’s tendency to repeat the word “tariff” in his sleep, I feel this can’t lead to positive outcomes.
Rising insurance costs for retailers due to security concerns, but also, for everyone in general. I am from South Africa, as you may already know; so I have seen first hand how hardship creates an incentive to do strange things. If times get too tough, we should expect crime rates to move in tandem.
Potential brand value dilution as grey market dealers gain more influence and relevance. We have discussed ‘close-outs’ before; where brands back-door new products to the grey market, for sale at a discount. As they struggle to move new watches, we can expect to see more of this going on - and in turn, brand equity will crater. The only solution is to reduce production, slash work forces, and adjust for the new demand level.
Tailwinds
Some positive factors worth considering:
The growth of watch-focused social media creating new collectors.
Emerging markets developing more sophisticated luxury consumers.
The potential ‘safe haven’ status of certain watches during currency volatility.
Growing interest in mechanical watches as a reaction to an increasingly digital world.
The last two aren’t necessarily Trump-focused, but I was struggling here!
Crypto
Cunningham touches on cryptocurrency’s relationship with watch prices but seems hesitant to draw strong conclusions. I’d actually argue the connection was more significant than he thinks. During the 2020-2021 crypto boom, I saw a clear correlation between crypto wealth and watch prices, particularly in certain models. The nouveau riche crypto cats were doing what most people do with rapidly new found wealth - buying status symbols. I don’t see this dynamic changing, simply because humans will always be this way (for the most part). Now, whether or not crypto will go on a massive hot streak, I have no idea; but it’s definitely not looking like cooling anytime soon. Famous last words, I know.
BRICS
The BRICS situation is a useful layer to add to this discussion. Looking at the data, BRICS+ now controls 42% of global central bank foreign exchange reserves. When you combine this with Trump's tendency toward punitive trade measures, you get a potentially volatile mix that could significantly impact luxury goods markets.
The BRICS data also shows an interesting trend in de-dollarisation, with their share in global trade remaining steady at about 20-21%. I think it is noteworthy that they are increasing focus on internal trade between member countries, especially in fuel trade where their share has more than doubled in the last 2 decades to 37%.
When you combine this with Trump’s protectionist policies, you could see a world where BRICS accelerates their de-dollarisation efforts. This might actually benefit certain segments of the watch market, especially the ones which have already established strong positions in non-dollar currencies.
Final thoughts
Obviously the future of the watch industry won’t just be determined by direct economic policies, and the complex interplay of geopolitics, technological change, and evolving consumer preferences will play a massive role. What is worth paying attention to is how this might affect different segments of the market; for instance, high-end independent watchmakers might benefit from increased market volatility (as we saw during COVID-19), and mass-market luxury brands could increased face pressure from trade restrictions and currency fluctuations.
I’d love to hear your thoughts on this. What other factors do you think might influence the watch market under a second Trump presidency?
LV’s T’s & C’s
It won’t be news to you, that Louis Vuitton recently announced their second Watch Prize for Independent Creatives, with applications closing in April 2025. On the surface it sounds lovely - who wouldn’t want €150,000 and mentorship from La Fabrique du Temps? Ok, I can think of a few watchmakers, but that’s not the point. Let’s take a look at LV’s terms and conditions; we’ll start with intellectual property rights and image licensing.