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InsideArbitrage Special Situations Newsletter: June 2024

  • June 1, 2024

A 4.41% decline in the S&P 500 in April was reversed by a 4.82% gain in May, leaving the exchange essentially unchanged over a two month period. The Nasdaq also reversed its April loss with a strong gain of 6.88% in May, thanks in large part due to further gains in Nvidia. However, sentiment once again dipped into fear territory towards the end of May. Uninspiring earnings from several cloud software and database companies like Workday, Salesforce and MongoDB that saw double-digit stock price declines after reporting results gave investors pause.

Q1 2024 GDP was revised down to an increase of 1.3% from a previous estimate of 1.6%. The personal consumption expenditures price index increased by just 0.2% in April, providing another data point to encourage the Fed to change its “wait and watch” stance. With central banks around the world starting to cut rates, it is unlikely the U.S. will remain the only holdout for long. If the Fed does not act soon, I think we are very much primed for yet another downturn in this roller coaster market. Towards that end, our focus this month is a tender offer and a short position.

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