Arora: AMD Deal Not Bad for NVDA, Japan Trade Strong, Gold Rally Can Sustain

AMD and Nvidia - AMD's recent deal has surprised the market and is seen as a significant development, with OpenAI acquiring warrants to buy about 10% of AMD at a nominal price, contingent on performance and stock price increases [2][3] - OpenAI's belief in AMD's potential is reflected in the target price of $600 for AMD stock, which is currently around $200, indicating a strong bullish sentiment [2][3] - The deal is not expected to negatively impact Nvidia significantly, as Nvidia remains dominant in AI model training, while AMD is anticipated to capture a larger share of the inference market, potentially reaching 20% [5] Japanese Market - Japanese equities experienced a rally of nearly 5%, influenced by political changes, including the potential for pro-stimulus policies under the new prime minister [6][7] - The yen's depreciation is linked to the performance of export-driven stocks, and rising bond yields are a response to anticipated fiscal stimulus [6][7] - The carry trade involving borrowing in yen to invest in US stocks could lead to volatility if there are significant changes in Japan's economic policies [6][7] Gold Market - The company has maintained a long position in gold since it was priced at $1,000, but current market conditions suggest it may be overbought, with a recommendation to wait for a pullback before buying more [9][10] - The ongoing geopolitical tensions and economic uncertainties, including the US government shutdown and issues in France and Japan, are contributing to the demand for gold as a safe haven [11] - A portfolio allocation of 6 to 8% in gold is suggested, with plans to increase this position if prices decline [11] Market Dynamics - The current market rally is characterized by momentum investors who are less price-sensitive, leading to broad increases across various asset classes [14][15] - Smart money investors are trimming their positions rather than selling off entirely, indicating a cautious approach amidst rising prices [14][15] - The market is in a potentially dangerous territory due to the mechanics of momentum trading, which can lead to unsustainable price increases [15]