Gold Rally Keeps Shining… And FTAI Aviation Looks To Rebound 02/05/25

0:00Live from the Nasdaq market site 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 AI divergence shares a Google parent alphabet sinking after earnings as meta 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 F-Ti Aviation.

0:31One top analyst will break down the numbers for the engine company and tracking the transports. Why the chart master 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 Worth 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 percent already this year.

1:00more 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. 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.

1:35I think it takes that out. I think miners are starting to catch up and they should be. And listen, central banks have 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 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. Even in a strong dollar environment, which is exactly what we've had, gold has been working.

2:06Well, 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 U.S. as a reserve currency, hold your breath. That doesn't happen overnight, but I think those are ingredients here.

2:37But it's nice to see gold really be gold and prove that Bitcoin is not gold because, again, they are very different things. And on 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 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.

3:08But 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. 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.

3:40So while gold is at all-time high, in real terms, its peak was in 1980, when the Hunt Brothers were corning 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. Geopolitical. Guy mentioned central banks. Tim mentioned economy and inflation.

4:16It's not really an inflation hedge, though, right? Because that's what you're saying. What is an inflation hedge? Bitcoin's an inflation hedge. Bitcoin is risk on. Gold is risk off. So if you want to play gold, you've 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 the miners are 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. Sure. Obviously, there's beta in operating companies that you don't have in the commodity, and that's exactly right.

4:51But in the event of a market drawdown, the gold miners will go down typically just as much as the S &P, whereas gold will hold up. In all 20 %-plus declines in the history of the market, gold is outperformed every single time. But the nice thing – sorry. Yep. The nice thing about the miners 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 two to three, depending on where you are. But we've had a couple 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.

5:26And so that operational leverage was something that wasn't necessarily there. We've now seen a lot of that come in. We've had two quarters of numbers that for all these guys is record free cash flow. And then you also have the follow 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. If the market sells off, miners will underperform the market for sure. 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 percent year over year, which, again, you can say whatever the reason is.

6:01I 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 A in my clam was, Tim. Agnico Eagle. It was a good-looking piece of your clam, by the way. Everybody knows what's in your clam. Well, not everybody. But if you throw up an Agnico chart, I mean, that's been on fire. And then 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 Newmite can just get out of their own way, the stock should be at least 50 percent higher than it's currently trading.

6:33Not to 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 lean on gold. You don't really have that as much anymore, and that's why you see it lifting. Right. 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.

7:07TINA. Gold is the TINA trade in China because bond yields are so low. What had been historically the hedge, real estate, that's not investable anymore. Real quick, I mean, if our crack staff in EC 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 in more opaque, their word, not mine, markets, which is sort of these over-the-counter markets, some of these other things.

7:40The 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. 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. Meta, on the other hand, closed at a new all-time high and recorded its 13th day of gains, its longest winning streak on record. So will this outperformance last? Will the chartmaster here put out a pairs trade on just these two names today, Carter?

8:09Yeah, 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 can 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 Meta, you have a bull phase, you have a bear phase, it bottoms and has been moving higher since.

8:41Take 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 meta, starting to outperform Google for the first time in basically eight years. Play for the breakout. That's the conclusion. So in other words, it's possibly not even begun to really run relative to Google. That's what that chart would suggest. And some of that may be Google's doing here, too.

9:16Because, 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 and 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 Meta, with all of their CapEx spending, is rewarded. And this is another issue about, you know, last night at Meta's earnings, that they are actually reaping the benefits of that in terms of their AI strategy now.

9:49I think you're going to see the CapEx spending of$65 billion versus the DeepSeek 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 Meta right now. it's going to be a hindrance for them spending all that money on things that they possibly should not be spending that money on. Meta or Alphabet? Well, I think both of them, right? Because Alphabet's chasing Alphabet's outdoing Meta right now. My main concern with Meta and Alphabet. So you don't like either? I don't like any of the mega cap stocks right now.

10:24I 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 ad spend. If you're 98 % reliant on it, I get why everyone's bowled up, but that seems to be putting your chips all in one basket. I bet you we have a guest to talk about it. That's a fair point. I mean, Facebook, I think 75 % of the revenue comes from small and medium-sized business. So if you think, again, the employment picture is going to start to wane a little bit, the economy slows down, you know, they're not insulated from that without question.

11:07The reason why I still like, though, is, you know, 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 IEI spend. And they and Walmart are the two companies that are seemingly winning in this AI race. 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. Hey, Melissa. You know, Medi can spend 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?

11:46Well, 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 percent return on invested capital. So if you're looking for ROAI, there's evidence. I think there's a little of this is just just it's just PR. It's, you know, meta goes out of its way. They give this guidance. You know what's coming. I think they were very clear with the street that they were going to spend aggressively on CapEx. And so 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.

12:17But 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 Meta actually does a great job of communicating to investors what its investments are going to be. And it's given you great revenue growth, 2x 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 up. I like both assets, but I have a slight preference for Google. 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.

12:53I 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's 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. Well, so, Melissa, you're pointing out there's actually some other serious overhangs on Google.

13:26So there is the DOJ overhang. There's still this kind of chat GPT-esque AI search, this undermined search, meta AI search. You know, like there's more worries about Google's position, which it dominates in core search, and maybe that 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.

13:58They 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 meta. 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 AI is actually benefiting its search and YouTube businesses. Those growth rates are stronger than people thought.

14:27So they just need to kind of clear out some of the wood in terms of getting this cloud business to sort of re-accelerate 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, Meta's at 25 times earnings maybe goes a little bit higher, but not dramatically higher. Steve mentioned, you know, Facebook's reliance on, you know, certain things. What's the existential risk?

14:56Is it basically a slowdown in the economy? And again, maybe an unemployment rate goes higher and it hurts you small and medium-sized businesses? 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 existential risk for Meta, though, seems to have come and gone. And that was TikTok was going to take over. Not necessarily that it's going to get banned, but it certainly hasn't. The growth that it had is certainly flatlined or really materially slowed down.

15:30There was also a lot of regulatory concerns about Meta. But I think they've actually pivoted really well. And the company's really matured 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 then, but there may not be. And then you still have this a little bit of an overhang on what chat TPT and search agents, agentic forces could do to the core Google search business.

16:02That's still a little bit TBD. All right, Mark, great to get your take. Thank you. Thanks, Melissa. 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 in terms of? 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 percent a year for seemingly for a long time, decelerated 5 percent from third to fourth quarter.

16:40I like that the operating margin was up 330 basis points. But the fact that they spent 40 percent or they're spending 40 percent 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. Coming up, earnings season in full swing and shares afford are on the move tonight. The details and the numbers in the quarter next. And FTI aviation shares rebounding over the last few weeks.

17:12And 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. Welcome back to Fast Money. Shares of Skyworks tanking more than 20 percent 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.

17:45Philip Bowe spoke with CEO Jim Farley after results. He joins us now for all the highlights. Phil. And Melissa, we'll hear 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 out 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.

18:19That 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 over time. And he brought up an interesting point. Why should they pay a price if Canada and Mexico are tariffed and there are no tariffs on other countries?

18:59We want a comprehensive policy, not just towards Mexico and Canada. 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 Korea and Japan without these tariffs. We need a comprehensive look at such a tariff change. 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.

19:40If you're going to hit Mexico and Canada and it's going to impact U.S. 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 percent tariff on them. Going to hop back on the call, Melissa, if we have any headlines. We'll let you know. All right, Phil. Thanks, Phil. Well, the good news is they're not losing anymore on their EVs.

20:12Their EV losses are about the same that they've averaged for the past few quarters here. What's the other good news that there is? There's not a lot of good news. Yeah. 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, maybe it 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.

20:41Every 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 there. Stock sold off aggressively. So, the uncertainty around macro and auto, not great. I think the tariff stuff will work itself out, 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$5.5 billion. Whoever gets the strangle on those losses first will be the winner, and so far it's GM.

21:26How do the charts look? Well, so 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, they IPO in 1956. So, Joseph for Inflation has lost 99 % of their value. It's basically— So, you're saying there's a chance. I mean, you know. So, yes, you could catch a pop 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?

22:04But 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, how long were you on your horse when people were driving? I remember that changeover. You know, there was a lot of concern back in the city streets back then with all the amount of horses in the streets. You can imagine there was a lot of other stuff in the streets. People were worried. Then the cars came. I hear the music, but it's an important thing. I'm just going to start reading the keys. There's a whole thing in history about that.