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CNBC's "Fast Money"
Gold Rally Keeps Shining… And FTAI Aviation Looks To Rebound 02/05/25
00:42:59
Gold’s record run continues, with the yellow metal hitting all-time highs as investors digest the possibility of a trade war. How the safe-haven surge is impacting miners, crypto, and more. Plus FTAI Aviation looking to recover from steep losses following some short seller reports, and one top analyst says they’re cash generation could help do it. Where they could put the money to use, and if it’s enough to turn the stock around. Fast Money Disclaimer
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- [00:01]
Melissa Lee
What counts most to you? Maybe it's spending more time with the ones you love. Or maybe doing more of what you love to do. The key to being rich is knowing what counts. At Edward Jones, our dedicated financial advisors are people you can count on for financial strategies to help support what truly matters to you. Let's find your rich Edward Jones member SIPC.
- [00:31]
Phil LeBeau
Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org live from the Nasdaq markets.
- [01:04]
Melissa Lee
In the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Glittering gold, the precious metal hitting all time highs today. And the miners are finally coming along for the ride. What the moves mean for everything from the metals to crypto to rates. And a major divergence shares a Google parent Alphabet sinking after earnings as Metta ekes out its longest winning streak on record. What is behind the drastically different fortunes of these tech titans? We'll dig in. Plus, behind the wheel of Ford's latest quarter, the real read on FTI Aviation. One top analyst will break down the numbers for the engine company and tracking the transports. Why the Chartmaster says the group may hit the brakes in the short term. I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Steve Grasso, Carter Wirth and Guy Adami. We start off with gold's record run. The Safe Haven asset hitting a fresh all time high as tariffs on China raise the real possibility of a trade war and higher inflation. Gold miners benefiting from the move higher today. The GDX ETF that tracks the space up more than 20% already this year. More than doubling the metal and that same pressure pushing bitcoin even further below the $100,000 mark. So called digital gold falling victim to investors moving away from riskier assets. All of these moves coming against an uncertain interest rate backdrop. The 10 year yield at its lows of the year and down nearly 30 basis points from its January highs. So Guy has been pounding the table on gold as you all know, for some time now. Here we are.
- [02:29]
Carter Worth
Yeah, Tim as well and we'll both talk about it. But you know, it's all time high. Miners are starting to participate. You mentioned GDX I think October traded up to 44. I think it takes that out. I think miners are starting to catch up and they should be. And listen, central banks been buying gold hand over fist now for the last three years. That is not abated. And what I've said and what I believe, I mean they're hedging their own ineptitude and they're doing a really good job. And I think gold can continue to go higher. You mentioned rates that, that headwind of higher rates has become, if nothing else is abated, maybe a bit of a tailwind. And I think in just almost every environment that we can think of right now, gold sort of works.
- [03:05]
Melissa Lee
Even in a strong dollar environment, which is exactly what we've had, gold has been working well.
- [03:09]
Guy Adami
It's certainly held up. And yeah, think about where we were when the dollar was clicking over 109. Gold was even hanging in there. And so yes, totally agree with Guy if you look and I'm curious Carter's view on what I think is the greatest 20 year chart in markets is gold. And so the dynamics around gold though. So on a 20 year basis you're talking about secular trends, you're talking about thematic dynamics, you're talking about just things that have been going on over time. The fear about the dollar, the fear about the US as a reserve currency, hold your breath, that doesn't happen overnight. But I think those are ingredients here. But it's nice to see gold really be gold and prove that bitcoin is not gold because again they are very different things. And in a day when we got a weaker ism, services significantly weaker and I realize it's just one data point although the services numbers in January are weaker, you set this up along with what else is going on and it's a very good backdrop for gold. But I'll get to the economy. I mean I, I, you know what would be the biggest issue for the stock market? It would be a growth scare. Wouldn't be, you know. Yeah, the Fed being not quite as friendly as you want them to be. The Fed can't reverse and the Fed's not going to be hiking anytime soon. But, but really a growth scare. And when you have a 40 basis point move in the 10 year and 22 days year to date, that's something that suddenly now I'd be more fearful below 375 than above 475 and we've got a big payroll number on Friday. So kind of cool to be talking about macro in the middle of earnings season because I think this stuff's really important and I think gold is telling you something.
- [04:30]
Tim Seymour
Well, back to gold and one thing that you said is important. I mean, obviously it's a great chart. It acts well and yet it's still so far below its peak, adjusted for inflation. That's the key. Right. So that while gold is at all time high in real terms, its peak was in 1980, right. When the home prices were cornering the silver market and gold had the biggest spike of all time. So we would have to still go up another 20% to equal its all time high, adjusted for inflation. As to rates, I mean, and look, it turns out that it's neither higher for longer nor is it lower for longer. Rates are just this permanent for now, three years of this four and a half, a little bit higher, a little bit lower. And it might just be why the equity market has held up so well.
- [05:14]
Steve Grasso
Geopolitical guy mentioned central banks to mention economy and inflation. It's not really an inflation hedge though. Right, because that's what you're saying. What is an inflation hedge? Bitcoin is an inflation hedge. Bitcoin is risk on, gold is risk off. So if you want to play gold, you got to play with the leverage. Bet the miners. You said it two to three times. Leverage. We're not there yet. More room in the miners to run. So if you believe gold's going higher then, then the miners are going to get you the. Going to get you the leverage. And they have that operating leverage that we've seen, but we haven't seen the historic leverage that we often do.
- [05:51]
Tim Seymour
Sure. Is there's beta and operating company that you don't have in the commodity. And that's exactly. But in the event of a market drawdown, the gold miners will go down typically just as much as the S and P, whereas gold will hold up in all 20% plus declines. In the history of the market, gold has outperformed every single time.
- [06:06]
Guy Adami
But the nice thing, sorry, the nice thing about the miners is, is that, and I think what's somewhat sustainable about this relative outperformance because they really have underperformed the move in gold. And typically it's a beta of, you know, two to three depending on where you are. But we've had a couple of quarters now of the miners being able to show you two things. One, that the runaway inflation that actually affected their business, they weren't keeping pace also with the price of gold themselves. And so that operational leverage was something that wasn't necessarily there. We've now seen a lot of that come in we've had 2/4 of numbers that for all these guys is record free cash flow. And then you also have the fall through from the street who now are upgrading their gold price in their models because they can do and that's just a mechanical follow through So I do think miners can continue but they are higher bay if the market sells off miners will underperform the market for sure.
- [06:51]
Carter Worth
It's all true and you know this is not a political statement but in the fourth quarter during the election central banks accelerated their purchases by 54% year over year which again you can say whatever the reason is I mean the factually that's what's going on and in terms of gold miners not all gold miners are created equal. Now you recall last year the in my clam was Tim Agnico Eagle.
- [07:14]
Guy Adami
It was a good looking piece your.
- [07:15]
Melissa Lee
Everybody knows what's in your.
- [07:16]
Carter Worth
Yeah well not everybody but if you throw up an Agrico chart I mean that's been on fire and then the convert you know the other side of that is Newmont Mining which is a disaster and even Barrick Gold a disaster. So I agree. I mean the GDX should play catch up in a major way. If Newmont can just get out of their own way the stock should be at least 50% higher than it's currently.
- [07:36]
Steve Grasso
Not not to pick up. Pick up on what? Guy said not to get political as well but when you have sanctions on other countries they're forced to sell gold. So Ukraine, Russia in the beginning there were sanctions tremendous worldwide global sanctions on Russia they were forced. The oligarchs were forced to put to lean on gold. You don't really have that as much anymore and that's why you see it lifting right.
- [07:56]
Melissa Lee
There are some other forces like who is buying gold. Last year Turkey was the second biggest net purchaser who's got runaway inflation typically which makes sense systemic and China huge demand there because there are no alternatives really in China Tina gold is the Tina trade in China because bond yields are so low. What had been historically the hedge real estate that's that's nonvestable anymore real quick.
- [08:21]
Carter Worth
I mean if our crack staff and he can put up a gold chart over the last year April of last year gold took a leg lower and it was on the back of an announcement that China had stopped buying gold. Goldman Sachs came out with a note about a month or so ago said hey wait a second they're just not buying it in the ways they had before. They're buying it A more opaque word, their word, not mine, markets, which is sort of these over the counter markets, some of these other things. The Chinese have been buying gold now for the last three and a half or four years. They will continue to do so because I think they're playing the long game and they're actually winning on the back of that.
- [08:51]
Melissa Lee
All right, meantime, let's get to a big tech divergence. Alphabet dropping more than 7% today after posting disappointing results for its cloud business. Metta on the other hand, close at a new all time high, recorded its 13th day of gains, its longest winning streak on record. So will this outperformance last? Well, the chartmaster here put out a pairs trade on just these two names today. Carter.
- [09:12]
Tim Seymour
Yeah, so obviously these are the two big names in the sector of telecommunications, even though they're not the traditional at&t and Verizon. And we get right to the charts, but they've been identical really for quite some time. I think the first chart is a comparative chart and you can see those two lines end up at the exact same point. So that is meta versus Alphabet over the past seven, eight years. And let's look at them individually and you'll see they have the same general trajectory. So an individual chart of Metta, you have a bull phase, you have a bear phase, it bottoms and has been moving higher since. Take a look at Alphabet or Google. Now the question is, and the best way to look at two things is one relative to the other. It's a ratio chart and we have that here. And so this is meta divided by Alphabet and that gives you a relative strength line. And what that's toying with is the prospects of finally breaking out Metta starting to outperform Google for the first time in basically eight years. Play for the breakout. That's the conclusion now.
- [10:11]
Guy Adami
So in other words, it's possibly not even begun to really run relative to Google.
- [10:15]
Tim Seymour
That's what that chart would suggest.
- [10:16]
Guy Adami
And, and some of that maybe Google's doing here too. Because again, if you think about what we got last night, this is a question of, you know, all the things that you've pushed back on Google over the last 12 months or had plenty of opportunity were not the reasons why the stock sold off yesterday, why we're talking about this today. And that's what's fascinating. I mean, data center capacity for both Microsoft and Google is something that wasn't really the issue we were thinking about. And so it's with some irony that media with all of their capex spending is rewarded and this is another issue about you know last night at Metro's earnings that they are actually reaping the benefits of that in terms of their strategy Now I think you're going to.
- [10:54]
Steve Grasso
See the, the capex spending of 65 billion versus the deep seat doing it for 6 million. Whether they can, can't, doesn't matter. It got the conversation out there. I think you're going to see this as it's benefited matter right now. It's going to be a hindrance for them spending all that money on things that they possibly should not be spending.
- [11:13]
Melissa Lee
That money on matter or Alphabet.
- [11:15]
Steve Grasso
Well I think both of them. Right. Because Alphabet's chasing, Alphabet's out out doing better right now my main concern with Metta and Alphabet.
- [11:22]
Melissa Lee
So you don't like either?
- [11:24]
Steve Grasso
I don't like any of the mega cap stocks right now. I think for me they've ran as far as they can. I think you need to have a pullback and Meta has a 98% reliance on ad revenue. Google has a 78% reliance on ad revenue. That to me leaves a whole heck of a lot of room for a little bit of a monkey wrench to be thrown in with an economy with spend with any ads. But if you're 98% reliant on it, I get why everyone's bowled up but that seems to be putting your chips in all in one basket. I bet you we have a guest.
- [11:57]
Carter Worth
To talk about it. That's a fair point. I mean Facebook, I think 75% of the revenue comes from small medium sized business. So if you think again the employment picture is going to start to wane. A little bit of the economy slows down. You know they're not insulated from that without question. The reason why I still like though is last it's three quarters in a row now where their operating margins have blown away what the street was looking for on the back of their I spend and they and Wal Mart are the two companies that are seemingly winning in this race.
- [12:24]
Melissa Lee
All right, for more on what is next for Meta and Alphabet we do have a guest, Evercore ISI's Mark Mahaney. Mark, always great to see you Melissa. You know Meta can spend all it's what all it wants because it's showing investors a return on that investment. When are we going to see similar sort of metrics from Google to sort of allay investors concerns about this big splurge that they are forecasting for this year?
- [12:49]
Mark Mahaney
Well the, the funny truth here is that they both have had rising return on invested Capital over the last two years, they're both doing about 29% return on invested capital. So if you're looking for ROI, there's evidence, I think there's a little of this is just, just, it's just pr. It's, you know, goes out of its way. They give this guidance, you know, what's coming. I think they, they were very clear with the street that they were going to spend aggressively on CapEx. And so the, the street wasn't as shocked. Google is increased. It's always consistently a black box. I give them credit for giving us their CapEx guidance for the full year, but that was an outlier and therefore the street was caught disappointed and by surprise. Also, the cloud numbers were a little disappointing too. But I do think part of it is that I think Metta actually does a great job of communicating to investors what its investments are going to be and, and it's giving you great revenue growth to X that of Google. All that said right here, I probably would prefer Google. I just think there's more room for the narrative to change, more room for the multiple to go. I like both assets, but I have a slight preference for Google.
- [13:48]
Melissa Lee
All right. You know, when Mark Zuckerberg posted on his blog that they were going to increase CapEx by more than what the street was expecting, that was a surprise. I mean, that was announcing the news and the reaction was a positive one. And yet Alphabet will announce the news and the reaction was a negative one. So in terms of like the PR problem that Alphabet or the messaging issue, how does it fix that? Because if it's as simple as that, and granted there is still a DOJ investigation, I mean, there's some other things going on with the Google story that, that investors might not like. But when it comes to the message, how do they fix that? Because that seems like a highly fixable thing if the fundamentals are really there.
- [14:25]
Mark Mahaney
Well, so Melissa, you're pointing out there's actually some other serious overhangs on Google. So there is the DOJ overhang. There's still this kind of chat, GPT, ask a search, this undermines search, meta, AI search. You know, like there's more worries about Google's position, which it dominates in core search and maybe that's gets disrupted in the future and then it just hasn't been as much, I would argue, kind of cost discipline out of Google. Like Mark Zuckerberg made famous the term, you know, year of efficiency, and then he turned it into years of efficiency, you know, to his credit. And that's why those margins have gapped up and you just. The potential is there for Google to do the same thing. They just haven't done it. So that's why those three are sort of overhangs on Google stock. And that's why trades four or five, six times at a lower multiple than, than, than Metta. That's why Google trades at a lower multiple. But there's a chance for this to turn because I think the odds of a settlement between Google and the DOJ have gone up materially over the last two months. Right or wrong, I think that's absolutely true. The odds have gone up and then I think Google is showing that it's AI. It's that AI is actually benefiting its search and YouTube businesses. Those growth rates are stronger than people thought. So they just need to kind of clear out some of the wood in terms of getting this cloud business to sort of reaccelerate a little bit. They said it was a supply constraint. If that's true, show it to us and give us some revenue growth acceleration in your cloud segment this next year. These things come together and all of a sudden you go From Google at 21 times earnings, it gaps up to 25 times earnings. Whereas for me matters at 25 times earnings maybe goes a little bit higher, but not dramatically higher.
- [15:54]
Carter Worth
Steve mentioned, you know, their Facebook's reliance on, you know, certain things. What's the existential risk? Is it basically a slowdown in the economy and again maybe an unemployment rate goes higher and it hurts these small and medium sized businesses?
- [16:07]
Mark Mahaney
Yeah, yeah, absolutely. I mean these companies are so massive in terms of their ad revenue. I think if I added them up, it's 350 billion in ad revenue. Yeah, that's cyclical. So if you get a downturn in advertising spend, both companies will face that. The, the existential risk for Meta though seems to have come and gone and that was TikTok was going to take over. Not that it's not necessarily, that's going to get banned, but it certainly hasn't. The growth that it had is certainly flat, flatline to really materially slow down. There was also a lot of regulatory concerns about, about, about Metta, but I think they've actually pivoted really well and the company has really matured, you know, in a lot of different ways. So I think those existential risks are much further behind them. Whereas Google hasn't really gone through those yet. You still have this DOJ situation and they've been declared a monopolist. Who knows what the real remedies are going to be in August and hopefully there's a settlement before them. But there may not be and then you still have this a little bit of an overhang on what chatbots and search agents, agentic forces could do to the core Google search business. That's still a little bit tbd.
- [17:07]
Melissa Lee
All right, Mark, great to get your take. Thank you.
- [17:10]
Mark Mahaney
Thanks, Melissa.
- [17:11]
Melissa Lee
Mark Mahaney, Evercore ISI so in terms of the gap in multiple, let's say as Mark said, you know, Google Alphabet strikes a deal with the DOJ and clears that wood away. What is that good for?
- [17:22]
Guy Adami
In terms of that's, that's not enough wood out of the way here. I mean, I think this is Google's got issues still with Dynamics around where they are in their core business. I just think last night too was about cloud, which grew 30% a year for seemingly for a long time decelerated 5% from third to fourth quarter. I like that the operating margin was up 330 basis points but the fact that they spent 40% or they're spending 40% more on CapEx than the street expected means that that margin is not going to be so good. So I just think that DOJ and regulatory stuff is certainly something we should be considered for a lot of mega cap tech. I don't think it's in the price on any of them and I don't think that's what's holding back Google here.
- [18:05]
Melissa Lee
Coming up, earnings season in full swing and shares of Ford are on the move tonight. The details in the numbers in the quarter next and FTAI Aviation shares rebounding over the last few weeks and one top analyst says there is a lot more upside to come for the stock. How she says it could put its cash to work and what it could mean for profitability. Don't go anywhere. More fast money in two.
- [18:26]
Phil LeBeau
For 140 years MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together we're building a healthier future. Learn more@mycare.org learn how to use AI.
- [18:44]
Guy Adami
To be more successful with CNBC. Make it's new online course.
- [18:49]
Melissa Lee
We'll give you examples that can help you master AI tools.
- [18:52]
Guy Adami
Go to CNBC, make it.com AI and register now.
- [18:58]
Melissa Lee
Welcome back to Fast Money. Shares of Skyworks tanking more than 20% after hours. The chipmaker reporting a bigger than expected drop in quarterly revenue and guiding for a sales decline in the current quarter for its key mobile segment due to weakness in China. The company also announcing a new CEO well, another earnings alert here on Ford. Shares of the automaker tanking despite it being on the top and the bottom line. Philip Bow spoke with CEO Jim Farley after he joins us now for all the highlights, Phil and Melissa, we'll hear.
- [19:26]
John Fort
From Jim Farley in just a bit. The pressure that you're seeing on Ford shares, it's mainly because of the guidance for 2025, well below what the street was expecting in terms of a performance in the fourth quarter for the three primary businesses. Remember, they break it up by internal combustion engines versus EVs versus commercial vehicles. And once again, it's the ICE and the commercial vehicles that are carrying the water for Ford, profitable, solidly profitable. EV losses of $1.38 billion. That works out to a little over 37,000 per EV sold in the fourth quarter. But the guidance, as you take a look at shares of Ford, the guidance is the issue. They're forecasting a profit of 7 to $8.5 billion in 2025. They made 10.2 this year. Analysts were expecting more. The conference call has just begun. No doubt that'll be a focus of questions from analysts and it does not include, it excludes the potential impact of tariffs, which we talked about with Jim Farley on the closing bell overtime. And he brought up an interesting point. Why should they pay a price if Canada and Mexico are tariffs and there are no tariffs on other countries?
- [20:33]
Carter Worth
We want a comprehensive policy not just.
- [20:36]
Guy Adami
Towards Mexico and Canada.
- [20:38]
Steve Grasso
We understand all the pressures on the border and with drugs, but the reality is, you know, Hyundai, Kia and Toyota can import millions of vehicles through South.
- [20:48]
Guy Adami
Korea and Japan without these tariffs.
- [20:50]
Steve Grasso
We need a comprehensive look at such a tariff change.
- [20:55]
John Fort
All right. What do we get in this country from South Korea and Japan? About 16.8% of the vehicles that were sold last year, a greater percentage come from those countries than from Canada. And Farley's point is, look, there's no tariff on South Korea. There's a 2.5% tariff on Japan. If you're going to hit Mexico and Canada and it's going to impact US Automakers, shouldn't it also impact the vehicles coming from those countries? It'll be interesting to see if this gets any legs, any traction in the days to come. By the way, Ford, as you take a look at shares over the last year, they do import some vehicles, not a lot, but some vehicles that are built in China and those vehicles now have a 10% tariff on them. Going to hop back on the call, Melissa, if we have any headlines, we'll let you know.
- [21:41]
Melissa Lee
All right, Phil. Thanks Philibo. Well, the good news is they're not losing any more on their EVs. Their EV losses are about the same that they've averaged for the past few quarters here. What's, what's the other good news that there is?
- [21:54]
Guy Adami
There's not a lot of good news and we heard a lot of uncertainties around gm. And by the way, you know the reason you're not what we heard from the White House yesterday is I think it was yesterday was the day before. But the reason not South Korea and Japan is because this isn't a trade war, it's a drug war. So if you believe that but if you think about the tariff impact and someone was knocking on doors in the White House over the weekend from the auto industry saying this is a big problem for us. Every 1% in tariffs, actually every 1% on Mexico or Canada, but Canada is focused on more equals about a 500 million free cash flow hit to GM. So remember we had GM reported recently, their numbers were really solid in terms of the profitability. Their stock sold off aggressively. So the uncertainty around macro and auto, not great.
- [22:38]
Steve Grasso
I think the tariff stuff will work itself out. But, but the EV losses, GM was at 4 billion in losses last year. Then this year they said 2 to 4 billion. Now they're at 2. Ford is still at 5 to 5 and a half billion. Whoever gets the hang hang strangle on those losses first will be the winner. And so far it's gm.
- [23:00]
Melissa Lee
How the charts look?
- [23:01]
Tim Seymour
Well, much to say and it's all pretty bad, right? I mean what do we know? This stock is hovering at 52 week lows and now it will break below those lows. That's a bad setup. But as a business, as a Chart member, the IPO 1956 so just for inflation has lost 99% of their value. It's basically.
- [23:19]
Steve Grasso
So you're saying there's a chance.
- [23:22]
Melissa Lee
You.
- [23:23]
Tim Seymour
Know, so yes, you could catch a pop here, here or there. But I mean this is not the big outfit. It's really what it's a testament to is this. There's no such thing as a growth stock. There's only growth phases. When they come out with a Model T and everyone's got a horse, you're the growth story. Right, but just like Eastman Kodak or IBM or any other darn thing, when your day is done, your day is done and you're just another gambling chip in the market guy.
- [23:46]
Guy Adami
How long were you on your horse when people were driving over you know.
- [23:52]
Carter Worth
There was a lot of concern back in the city streets back then with all the amount of horses in the streets.
- [23:57]
Melissa Lee
Sure.
- [23:57]
Carter Worth
Imagine there was a lot of other stuff in the streets. Yeah, people were worried. Then the cars came. Now I hear the music, but it's important. There's a whole industry about that.
- [24:07]
Melissa Lee
Getting the engine running again. FTI Aviation looking to rebound after a few short reports sent shares plummeting last month. But one top analyst says they're generating some major cash where she says they could put it to use next. And there's more after hours action to bring you. Our own John Fort just sat down with the CEO of Qualcomm to discuss its results. What he had to say about the next move for the chip maker. You're watching Fast MONEY live from the NASDAQ markets at in Times Square. Back right after this.
- [24:32]
Guy Adami
Learn how to use AI to be more successful with cnbc. Make it's new online course.
- [24:37]
Melissa Lee
We'll give you examples that can help you master AI tools. Go to CNBC, make it dot com.
- [24:43]
Guy Adami
Slash AI and register now.
- [24:48]
Melissa Lee
Welcome back to Fast Money. FTI Aviation jumping nearly 7% today, continuing to climb back from its lows of the year. Shares of the aviation leasing company took a tumble last month after two short sellers alleged it had misrepresented earnings. Even with the recent rebound, it's still down more than 35% from record highs. But Jefferies just did its own forensic analysis of the company and thinks there are big gains ahead for fti. Sheila Kailu is Jefferies aerospace and defense analyst. She joins us here on set. Sheila, great to have you with us.
- [25:16]
Phil LeBeau
Thank you.
- [25:17]
Melissa Lee
So you're basically attacking sort of one of the biggest pillars of their report and that is that they are misrepresenting what they are selling. Yeah.
- [25:25]
Phil LeBeau
I think what fundamentally FTAI does is provide power by the hour for airlines and that's through leasing, exchanging or repairing their engines. And they're doing it and they're growing EBITDA 45% per year. When the stock was up 180% last year, it made them an easy target for the shorts.
- [25:41]
Melissa Lee
Yeah. I mean what one allegation was that they were buying engines or they had bought engines during COVID So they're depressed the values. Nobody wanted these engines and then they were reselling them at market current market prices. And so they were sort of misrepresenting because it wasn't a normalized situation. But you say that that's not actually the case because they actually increased their.
- [26:00]
Phil LeBeau
Inventory well past Covid Yeah, that's actually misrepresenting FTI's business. So they do have engines in their leasing portfolio that they bought in 2021, but those engines are 19 years old and they depreciate them down to full value. So basically these engines are then transferred over into aerospace products and they're at a fairly low residual value. So the thesis that they pre bought engines and they're skimming this margin is not what FTI does. FTI repairs engines and they do it at a discount to the major OEMs like GE and Standard Aero. And that's how they make the margin that they do. But the leasing portfolio provides that feedstock and that flywheel to be able to do that. But they're not in the business of exchanging engines. And because their engines are appraised every six months, they wouldn't be able to incur that benefit because it's part of their cost of goods sold.
- [26:50]
Melissa Lee
In our analysis, they report earnings at the end of February. Do you think they're going to have an update on where they are in their own analysis in order to sort of clear, clear this all out?
- [26:59]
Phil LeBeau
We see very quick catalysts ahead for this stock. You know, we're going to, there's going to be earnings on February 26th and their deadline to file their 10k is on March 3rd. So those are two things we are keeping an eye on to clear the air on what is doing. And we have 850 million of you, but on 2024 we have that going up 35% per year to 1.5 by 2026. So you could see why this has caught the attention of the shorts. How are they growing earnings so quickly?
- [27:26]
Carter Worth
Let's broaden it out a little. Your sector was on fire into the fall of last year and I don't want to play stock market, but names like Lockheed Martin went from 610 to 450Raytheon. The whole sector just got whacked on a bunch of different reasons. Have these names gotten to levels where just valuation alone makes them compelling?
- [27:43]
Phil LeBeau
My calls primarily focus on airlines and aftermarket defense names. We don't really have buys. 3 out of 13 buys in the group for defense names. The reason why we like the aftermarket is we've under delivered planes by 3,000 aircraft since 2020. It's really easy. And the CFM56 where FTAI focuses on is 50% of the engines globally. So that's where they're repairing engines. So names like GE, Heiko TransDigm, FTAI, we're all about and throw in United Airlines as our top airline pick. So those are the names I support versus Defense where even if revenues are growing, EBITDA is not growing above revenues. And that's a hard stock to own in our view.
- [28:19]
Melissa Lee
Sheila, thanks for coming by. Great to see you. Sheila Kayalu of Jefferies. We were actually talking to the big short guys in Miami and they were saying that they had been in FTI early on during the rise. They got out too early but then on the dip they bought because they thought that it was unfounded the short report. So I thought that was interesting.
- [28:37]
Guy Adami
Yeah. Certainly the business model is one that she was pointed out is one that certainly seems to be preferable ultimately for customers. The dynamic here around the stock too in terms of multiple especially after that pullback, it warrants a fundamental buy.
- [28:50]
Melissa Lee
Yeah. How does chart look?
- [28:52]
Tim Seymour
Well, so you've got a circumstance of exceptional outperformance 10 year basis outperforming Apple, Microsoft, doubling the queues practically. And then you've got that drop in gap. Now from a chart point of view we're not looking at the why is it a short report if you're just sitting in your room like it did drop in gap. And so this bounce back leaves it at a pretty difficult level. I would use the bounce back to.
- [29:12]
Steve Grasso
Reduce I catch a retracement level so that this drop that you see right here, I could work my way back up to approximately 128, 130. Sheila has a $200 price target. It's got to be an approved me state because if you look at the prior two tops recently, you're going to stall out around that 180 level. So you need something to get you over the hill.
- [29:31]
Melissa Lee
All right, coming up, Qualcomm on the move after reporting results and our own John Ford just heard from the CEO in the state of the semi stock what he is saying about the latest quarter that is next best money's back into. Welcome back to Fast Money. Stocks notching back to back gains as investors shook off more tariff concerns. The Dow climbing more than 300 points. The S&P up 410 of a percent and the Nasdaq up 210 of a percent. Shares of Johnson Controls surging more than 11% on the back of results and leading the S&P 500 today. The H vac and building solutions company lifting its full year profit forecast and naming a new CEO activist Elliott Management has a more than $1 billion stake in the company. Shares of Uber dropping nearly 8% after reporting this morning, the ride share company missing earnings expectations and giving soft guidance. And shares of chemical maker FMC Corp. Plunging nearly 34% after missing revenue expectations and posting disappointing guidance. And shares at Capri dropping more than 10% today after missing earnings estimates for the sixth straight quarter. This is Capri's first report since the proposed Tapestry merger fell through. The luxury retailer also reporting disappointing revenue forecasts. You guys are all hopped up on Johnson Controls today.
- [30:41]
Carter Worth
Well, if you recall, Melissa Lee, we play this game where we spell a word, anagram. What's the thing we do acronym right. A few years ago. Remember the mojo?
- [30:50]
Melissa Lee
Sure do.
- [30:51]
Carter Worth
J and J. And now again, I think that a lot of these people watch this show and they said we might want to get in this JCI now and our world early is wrong. But this is in a lot of ways. A lot of the things I thought could happen are starting to happen in right before our eyes now. You're not chasing it here, but good for jci.
- [31:09]
Melissa Lee
All right. And now more after hours action. Microstrategy, now known as just strategy, that is on the move after reporting results. Tenaya McKeel has the details. Now, Melissa, the big takeaway is that this company is almost halfway to its capital raising goal. They've laid out to raise $42 billion in securities between 2025 and 2027. Reporting they completed 20 billion of that, $20 billion of that target in Q4, so well ahead of their timeline. And of course spent $20 billion buying Bitcoin throughout the post election rally. The metric investors are looking at with a company like strategy is BTC yield. This is a metric created by the company to measure the performance of its Bitcoin acquisition strategy. So if they increase their bitcoin holdings over a given period at a faster pace, then they increase their outstanding shares, they achieve a positive BTC Yield. They ended 2024 at 74.3%. They were targeting 6 to 10% annually and are now raising that target to 15% for 2025. So it's a new metric, Melissa. Investors are still wrapping their heads around it, but it's a goalpost for strategy, Melissa, if they increase their bitcoin purchases faster than they issue common shares. Is that, is that it? Yes, that's it. So they're raising that target to 15%. Okay, thank you. Yeah, thank you to Naomi Kiel. All right, so habits, old habits, are hard to break. It's not Microstrategy anymore. It's strategy with a little bitcoin sign like Kesha. Remember her with the dollar sign.
- [32:38]
Guy Adami
Same thing.
- [32:39]
Melissa Lee
It's exactly the same thing. And we've talked about this before, the bitcoin yield, it seems like you could control that.
- [32:48]
Guy Adami
Well, again they're telling you this is how you should follow our company and this is what we think is the right metric. And ultimately that bitcoin yield is a function of bitcoin going higher. And it's great to buy more bitcoin than shares you issue. If the price of bitcoin is going higher, it's obviously very levered in the opposite direction if it's not working. That's it's that simple.
- [33:09]
Tim Seymour
So you want to sat around and said we could change our name. I must have had a few meetings on the subject. They had microstrategy said they went with strategy. They could have gone the other way and said was called bitcoin strategy. Yeah, maybe a little more.
- [33:21]
Melissa Lee
Sure, sure. Our B strategy kind of gotten right to it. Yeah, yeah. I wonder how many, I wonder how many people they paid to get come up with that.
- [33:32]
Steve Grasso
Well, Michael Saylor tells his story. When you hear him tell his story, you will put all of your money into Bitcoin. He's very effective at what he tells. You know what you know, you know what you don't know. He knows bitcoin, he knows the yield and he knows how to tell the story story better.
- [33:47]
Melissa Lee
You're all in any.
- [33:48]
Steve Grasso
I am fortunate. Well, just think about this. My average price is 62,000 on a Bitcoin equivalent. So everyone's had a tremendous run trading underneath 100,000. Ethereum trading underneath 3,000. So you catch it a little, little bit of sell the profit.
- [34:04]
Melissa Lee
All right, now to an earnings alert on Qualcomm shares falling into the red even after the chip maker beat on the top and the bottom lines. Earnings coming in at 341A share in revenues of 11.5 billion. The company seeing growth in all three of its major end markets. Handsets, automotive and the Internet of things guidance for the current quarter also topping street estimates. John Ford just spoke exclusively with Qualcomm CEO Cristiano Aman. He joins us now with more from that interview. John? Melissa.
- [34:30]
Guy Adami
Yeah, I did speak to Cristiano before.
- [34:32]
Melissa Lee
The call about growth in PC market share. He said last quarter Qualcomm had 10% US retail market share in laptops, $800 or more. And he says that's just the beginning.
- [34:47]
Guy Adami
On an investor day last year, we said by 2029, you know, we outline our plan for five years to grow 22 billion of known handset revenues for 2029 on Windows PCs. We said 4 billion or a $35 billion SAM. That's about a 12% share. That means we're tracking great. And when you look at PC overall in the quarter, we're showing that designs continue to increase. We now have a new product for $600 price points which will expand the addressable market. So we'll keep going.
- [35:20]
Melissa Lee
He also talked about handsets, smartphones and how premium share gains in China are boosting Qualcomm's QCT business to its first $10 billion quarter.
- [35:33]
Guy Adami
Our customers are gaining share and the premium tier is expanding. And this is all end customer demand. It is end customer demand is not channel. And that's a great story. And it's also reflected in our guide for Q2, which is above revenue and consensus on EPS.
- [35:53]
Melissa Lee
Finally, DeepSeek. He says it's a tailwind.
- [35:57]
Guy Adami
Within days of the Deep SEQ announcement, people were showing it running on Snapdragon phones. Showing on Snapdragon PCs. As a matter of fact, Microsoft announced that Deep Seq R1 is running on Copilot PC starting with with Snapdragon.
- [36:15]
Melissa Lee
So lots of good news from Cristiano's perspective. Melissa. So what's the bad news? What's taking the stock lower? I mean, do they address some of the concentration issues that have sort of plagued the stock? Concentration when it comes to end market users, smartphones concentration issue when it comes to country dependence? China. Well, maybe there is some China concern. He did say that it's not an issue of end market, you know, tariffs getting people to stockpile components ahead of a tariff threat. He said it's really end market demand that they're gaining share there. He did also address concerns about the automotive market and tariff impacts there. Now, not completely sure what's going to happen, but he said their global footprint and their diversification across so many different automakers and end markets would mute any impact there. So nothing that he said that sounded like an admission of, oh, we've got a vulnerability here or there. Not that I heard in my 10 minute conversation with him also. All right, John. Thanks, John, for just quickly. I mean, smartphones are more than 70% of its business, China's more than 40% of its business.
- [37:21]
Carter Worth
That's it. And last quarter I thought the stock set up really well in the earnings and I looked like a genius for about an hour and a half and then the stock sold off precipitously. It's been sideways ever since business. But they're in the. I hate to say it, they're in the wrong businesses. I mean, that's why. Because if you just look at these numbers on the surface, double beat on eps, double on revenue. Yet the street is not happy. Why? Because they're in. Businesses are deteriorating, not growing.
- [37:45]
Melissa Lee
Coming up, charting some transport trouble. What the chartmaster says is in store for the road and rail stocks. The details and fast money returns. Welcome back to Fast Money. The transport trade having a bumpy ride over the past year with ground transportation players especially under pressure. The S and P road and rail index down nearly 5% while the Dow transports have risen almost 3%. So where does the group go from here? Let's turn to the chartmaster of course, Carter.
- [38:11]
Tim Seymour
Sure. So this is specifically, it's trucks and trains, right? We're not talking about the Dow Jones Transportation average which has Uber, it has the package haulers, FedEx, UPS, it has Avis and so forth. So literally trucks and trains, the big industrials, there are some of the big names. You see them. Let's go right to the charts and I want to make this point. This is a 30 year comparative chart. And the Blue line has tripled the performance of the Orange line which is to say an aggregate of road and rail has tripled the performance of the S and P. Just to put that in context, next chart, let's add the Dow Jones Transportation average. It's basically marched with the S and P. It's the truckers and trains that have been such exceptional performers. But then of late that's changed. Take a look at what we have now. Here's a comparative chart. The orange line is now lagging. This is the road and rail index. Trucks and trains basically stalling as the market has continued higher. And so that then gives rise to a relative chart or two. Here is a day to day ratio chart. And this of course is down and to the right. If you're going sideways and the market's going up, your relative performance line as you seen here is going straight down. Look at a long term ratio chart and we've started to break down that huge outperformance for so long we've broken trend and my hunch is lower. And so finally just an absolute chart of this aggregate which is available by Standard Poor's. This is a well defined uptrend. We have bounced off that trend line to the penny four or five times and I think we're headed back to trend yet again.
- [39:40]
Melissa Lee
All right, do you think we're headed lower here in this group?
- [39:43]
Guy Adami
Well, it's, it's fascinating. Because of the cyclicality and I think people are all over the place on the economy. If you, if you look again at some of these names relative to where they have traded on multiple over the last five and 10 years, you can make an argument that say a JB hunt is, is actually somewhat expensive to itself in a world where these things don't re rate, you know, at whim. Much like tech stocks.
- [40:06]
Carter Worth
If you look at the big three rail, csx Union, UNPNSC for the last three years they've been trading sideways. So if Louisa Motta was here, she's not. She would say maybe Carter's here.
- [40:17]
Melissa Lee
That's kind of insulting to him.
- [40:18]
Carter Worth
No, it's not all because.
- [40:19]
Melissa Lee
Okay, good.
- [40:20]
Carter Worth
She, he's on the top of the Parthenon. As you know, she would say the longer the base, the higher in outer space. But they're not trading well on what's been an amazing tape. So I'm actually with CBW on this one.
- [40:31]
Melissa Lee
All right, coming up, the emojis of investing our investors. Smiley face, frowny crying. What Investor PD's latest sentiment survey is telling us about the views on the Fed Crypto and Trump 2.0. More fast money into. Welcome back to Fast Money. Investor sentiment is starting to fade as uncertainty over tariffs looms over the markets. That's according to Investor PD's latest survey. While most are still at least somewhat optimistic, nearly 40% are skeptical, hesitant or ready to walk away. Editor in chief Caleb Silver joins us now. Caleb, finally. They're cracking. They're worried now.
- [41:06]
Caleb Silver
Yeah, you better cue the Righteous Brothers because they're trying not hard not to show up at Fast Money. You know it.
- [41:12]
Melissa Lee
Right.
- [41:12]
Caleb Silver
They're losing that love and feeling just a little bit.
- [41:14]
Guy Adami
Could be a scene out of Top Gun.
- [41:15]
Caleb Silver
Still optimistic, but it's pulling back quite a bit. Kind of the biggest pullback we've seen in about 12 months. Around 41% say they're cautiously optimistic. 13% are optimistic. But you're seeing just this hesitancy and it's because of the issues, the tariffs, obviously we have that big pullback in AI and tech related stocks. 1/3 now expecting the market to drop 10% or more in the next six months. Doesn't sound like a lot of people, but when you survey the amount we do, that's a lot of people who feel that way. 49% feel the market is overvalued. We've had that overvalued feeling for quite a while. But it's getting into the way they're kind of feeling about their portfolios. Maybe it's not stopping them from buying their favorite stocks, but they're getting more cautious.
- [41:52]
Melissa Lee
It doesn't seem to be stopping them from owning the stocks in which they think there are bubbles. I thought that was really interesting that many people think that they're bubble and like the stocks and tech stocks, but those are the stocks they still own.
- [42:02]
Caleb Silver
That's. Those are the stocks they still own. If you look at their top 10, those are also the stocks they would own for the next 10 years. Almost the same exact portfolio of the Nvidias of the world. Microsoft, Amazon, Alphabet, you got met in there. Some investors holding Berkshire as well. But still they're fair. They, they fear the bubble, but they're not willing to let go of it.
- [42:19]
Carter Worth
Late entry to the top concern US China relations. I haven't seen this one on your list.
- [42:23]
Caleb Silver
Yeah, it's been down the list, but now it's climbed the list and it's all tied into the tariffs, which could produce inflation. More anxiety over the US China relations. But we also saw for the first time on this, concerns about deepfakes. Right. Concerns about technological developments in AI that may make that pricing model look a little bit weird. That's what we had that big sell off for last week. So that's starting to creep into the psyche.
- [42:44]
Steve Grasso
Caleb, when you look at the 33% expect a 10% drawdown. Is that usually a contraindicator? What are we hoping for? What gives that the most accuracy? The higher the number is it a is more.
- [42:55]
Caleb Silver
It's a little bit of a contrarian indicator because I think everyone was too far on this side of the boat. So when you see people pulling back a little bit and saying that they're actually putting money now into money market funds after those yields have even come down a little bit, that tells you that maybe we have seen the contrarian indicators start to pop up a little bit and you've seen these rallies off of these dips lately. We're not willing to let the dips go. People just want to keep owning these stocks, whether it's individuals or institutions. But our readers want to stay invested. They're just feeling like something's been missed right now. And there's been a lot of headlines that have scared them.
- [43:25]
Melissa Lee
Last ten seconds. My favorite question, what would you do with $10,000? It's still equities.
- [43:29]
Caleb Silver
It's equities. Individual equities. And who can argue when you've seen the outperformance of some of these stocks over the last couple of years. You feel like you're in the slow boat if you were in an index.
- [43:37]
Melissa Lee
Yeah. Caleb, great to see you as always. Caleb Silver Investor PD up next, final trades Time for the final trade. Let's go around the horn.
- [43:44]
Guy Adami
Tim yeah, we're at pretty decent numbers. Their guidance was not good, but those bookings numbers are good. I just think the stock's cheap at these levels. I think you nibble.
- [43:52]
Steve Grasso
Steve MP Materials on long it's been right? I think it goes much higher.
- [43:56]
Tim Seymour
Carter Advertising and Marketing company Magnite MGNI.
- [44:00]
Carter Worth
Up and out Guy apparently there's some ice storms coming, so be careful out there.
- [44:05]
Melissa Lee
Gilead Helms all right, thanks for watching. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates andor subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Learn how to.
- [44:49]
Guy Adami
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Melissa Lee
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Guy Adami
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