Stock market gains in April, May, and June, will energize second quarter net earnings from Warren Buffett's Berkshire Hathaway when the numbers are released after the stock market closes today.
That will be a sharp contrast from recent quarters when market losses depressed Berkshire's net numbers and its stock price.
The U.S. benchmark S&P 500 index gained 15.2 percent over the three months. That will sharply reduce the "paper" net losses from a multi-billion dollar series of equity put options written by Berkshire.
The derivatives are a form of insurance, sold by Berkshire to buyers who want to protect themselves against long-term drops in the S&P and three other global stock indexes.
Berkshire has already taken in almost $5 billion in premiums on the insurance, which it can invest. It will only have to pay any claims if, on various dates between 2019 and 2028, the "insured" stock indexes wind up lower than where they were when the policies were written in the last few years.
Under accounting rules, however, Berkshire has to calculate how much it would make or lose on those policies if they were cashed in now, and include that result in its net earnings each quarter. (The terms of the deals prevent the buyers from trying to collect before expiration.)
In recent quarters, the "paper" losses piled up as stocks fell, hurting Berkshire's net profit.