Europe divided (again)

David Cameron, the Prime Minister of UK managed to stir the markets up a bit yesterday by vetoing the new EU treaty. The accord was meant to turn the European Union into a fiscal union which, in turn, would strengthen the common currency. After 10 hours of negotiation in Brussels, all other 26 member countries agreed to sign the new treaty, but as treaty rules say, in order to amend or change any parts a consensus must be reached.

Santa Claus rally in the S&P500 and FTSE100 ?

Now that the year is drawing to a close and the liquidity is thinner and thinner fund managers are preparing for their Christmas gift: a traditional year-end equity rally, to massage the bottom line. The S&P has seen December rallies in 4 out of the last 5 years and 2011 is most likely not going to be an exception.

I wouldn't bet the farm on a sustainable growth though, because after the punch bowl empties out, there will most likely be a hangover on the stock market.

Berskshire's Q3 income brought down by derivative losses

The holding company managed by billionaire investor Warren Buffet, Berkshire Hathaway Inc. (BRK/A) announced that Q3 profits declined by 24% due to the index derivative bets. Warren Buffet speculated on the long term recovery of the stock market (through several global indexes such as the S&P500 and the FTSE100) by selling puts on the indexes. Needless to say this derivative position is in the red for about $2 billion according to Warren Buffet out of  $4.9 billion position.