The Westport, Connecticut-based firm run by Laszlo Birinyi bought an unspecified amount of $170 calls on the SPDR S&P 500 ETF Trust, according to a report e-mailed to Bloomberg News today. They will become profitable if the S&P 500 gains more than 5% by December.
“In addition to the historical parallels, we still view sentiment as subdued and nowhere approaching extremes,” Birinyi, president, and Jeffrey Yale Rubin, an analyst at the firm, wrote in the May 3 report.
Warren Buffett, chairman of Berkshire Hathaway Inc., said he ignores macroeconomic forecasts such as Bill Gross’s “new normal” when investing and sympathizes with people who stuck with bonds amid low interest rates. Gross’s firm, Pacific Investment Management Co., coined the term “new normal” in 2009 to describe an era of lower returns, heightened regulation and shrinking U.S. clout in the world economy following the 2008 financial crisis.
“What we see is a slow progress in the American economy,” Buffett, 82, said at Berkshire’s May 4 shareholders meeting in Omaha, Nebraska. “We’ll move forward but I don’t think we’ll be in any surge of any sort, but I don’t think we’ll stall either.”
Berkshire Class B shares climbed 1.1% to an all-time high of $109.79, and Class A shares jumped 1.1% to a record $164,725. First-quarter net income jumped 51% to $4.89 billion, or $2,977 a share, as profit improved at the largest operating segments and investment gains added to earnings, Berkshire said May 3.
Financial stocks increased 1% as a group. The KBW Bank Index added 1.2% as 22 out of its 24 members rose.
MBIA Inc. surged 38% to $13.59. The bond insurer will get about $1.6 billion as part of a deal to end five years of litigation against Bank of America and its Countrywide unit over claims of defective securitized mortgage loans, a person familiar with the matter said. Bank of America jumped 4.6% to $12.81. JPMorgan climbed 1.4% to $48.21.
Technology stocks also advanced, adding 0.6% as a group. Apple Inc. jumped 2.5% to $461.16. Google Inc. climbed 1.6% to $859.51.