A Tight House Vote & OpenAI’s New AI Device 5/22/25
33:01 Share

As America's leading business lender, Bank of America is on your corner and in your corner. With $215 billion in business loans and over 3,700 business specialists across the nation, we help businesses thrive so communities prosper. What would you like the power to do? Learn more at bankofamerica.com slash localbusiness. Bank of America, official bank of FIFA Club World Cup 2025. Copyright 2025 Bank of America Corporation. All rights reserved.

Don't just ride the index, seek to outperform it with FELC, the Fidelity Enhanced Large Cap Core ETF. Unlike passive ETFs, FELC is run by a team of experts to adapt to market conditions and pursue upside potential wherever it's hiding. And

And while you get the potential outperformance of an actively managed fund, you can still buy and sell it on your terms, just like any other ETF. Discover FELC, the Fidelity Enhanced Large Cap Core ETF, part of Fidelity's suite of active ETFs. Learn more at fidelity.com slash FELC.

Bring in show music, please.

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. The bill is passed. A tight vote in the House for a massive tax bill made possible by a few holdouts changing their minds, like Congressman Chip Roy, who is still hoping for some edits in the big, beautiful bill's next phase. We're going to be pretty strong on some red lines ourselves. The fiscal hawk saying, look, guys, don't come back and send us a bill that's going to ratchet up deficits.

And the summer travel season kicks off with a Memorial Day holiday. The points guy Brian Kelly on what the industry expects. Americans are still traveling, but what the airlines need are those premium customers paying a lot of money to fly to Europe.

Plus, Nike to raise prices on tariff uncertainty. And the iPhone designer, Johnny Ive, teams up with OpenAI's Sam Altman, our Steve Kovach reports. Wow, wow, wow. I could not believe this was happening. But what are they building? I still need to know what it is. It's Thursday, May 22nd. SquawkPod begins right now. Stand back, you buy in 3, 2, 1, cue, please.

Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. Roughly 1.5% to 2% losses for the major averages yesterday. You saw pressure across the board for the Dow. It was UNH that was the biggest decliner.

But there was pressure on the S&P as well. It was down pretty sharply, and Apple was the biggest decliner there. Treasury yields jumped yesterday. You can see this morning they're down just slightly. The 30-year is still above 5% at 508. The 10-year is at 457.

There was a disappointing auction of 20-year bonds. The 20-year bond did not generate the interest that had been anticipated. Also, there were some concerns over the U.S. deficit. You have what's happening in Washington and talks about the budget for next year, really in the backdrop for all of this as we kind of see what happens. But if you look across the board on the long end,

The basis, the yields are about 14, 15, 16 basis points higher than they were at Friday's close. A lot of things have happened. You had Moody's downgrading the country, but that was really catching up with the other ratings agencies. But again, it's the action in Washington, the expectation for additional...

deficits to be racked up. It's not just here, it's around the globe too, but Jamie Dimon was talking about this. Just issues that he sees there. The inflationary trade that's also happening with the remilitarization around the globe, changes with trade policies, all of those things adding to some concerns and we have seen that with the yields over the last several months. The 30-year bond actually broke above the key 5% for the level for the second time this week. It reached a level that hadn't been seen before then since October of 2023.

Johnny recently gave me one of the prototypes of the device for the first time to take home and I've been able to live with it. And I think it is the coolest piece of technology that the world will have ever seen. The products that we're using to deliver and connect us to unimaginable technology, they're decades old. And so it's just common sense to at least think, surely there's something beyond these legacy products.

- Sam Altman and Johnny Ive, the man who helped Apple design many of its most iconic products, including the iPhone, teaming up on what they hope will be the next generation of devices. Steve Kovach joins us right now with more, and there is so much in this story. - Oh my God, this is probably the biggest story. The first thing I said when this broke yesterday, I was just like, wow, wow, wow. I could not believe this was happening. And that's because Johnny Ive, he left six years ago. He left Apple to start this new design firm called Love From,

And a few years later, he ended up poaching some of the top design talent at Apple, brought them over to his new startup. And now that startup is called IO, is being bought by OpenAI for $6.5 billion, at least in stock in OpenAI. And this really paints a picture of Apple under the Tim Cook era, which by the way, the performance speaks for itself. Just look at the stock, look at the growth numbers,

Massive success there. There's no question about that. However, there's also been this like growing schism of thought around what's happening at Apple. This idea that the design forward innovative hardware products has gone since Johnny Ive left the company.

And now Johnny Ive is here. We just saw that video of him with Sam Altman. He and Sam Altman are saying, "We've created this amazing new product that is going to kind of wean you off the iPhone. It's gonna be focused on AI." All the stuff that we talk about Apple kind of missing out on, Johnny Ive is now bringing that as a potential rival over there. And at the same time, we've seen Apple

Apple kind of stumbled out of the gate to get innovative products out. The Vision Pro has not exactly been the breakout product that Apple and so many other people probably hoped it would be. And then of course, this year, that big artificial intelligence miss when they failed to deliver on that Siri upgrade.

At the same time, we're seeing, opening eye, they're putting enormous pressure on themselves, guys. So they say, whatever this mystery project is, they're saying, what it's not. It's not a phone. It's not glasses. It's not something you wear, like that humane pin that was a flop. This is going to be something else. And if they don't really knock our socks off here, this is going to look like a $6.5 billion blunder. At the same time, if they do knock our socks off, watch out, Apple. Could it be socks? It could be socks.

It could be stocks. I was going to say, it's all in stock. So let's talk about the economics of that. Exactly. There's no cash here. There's no cash. And I believe it's only based on a valuation of...

Open AI reaches a $300 billion. Right over that. Yeah. So ultimately, it's diluted. Well, not just diluted. All I was just going to suggest is there's a performance element. Exactly. Right. And then, you know, according to the journal today, Sam was saying to folks inside the company that he thought this could elevate them to become a trillion dollar proposition. Yeah. And that we're talking about not just a device that's going to go, you know,

There's like a third device. But like hundreds of millions. He said 100 million. 100 million, that's huge. That's huge, but keep in mind there are a billion iPhones in the world. So there's a long way to go from there. And he also didn't say, according to this Wall Street Journal report, we're not going to make 100 million overnight. It's going to take some time to get there, but we're going to get there faster than anyone ever has. I guess I'm just so fascinated by the...

the speed dating, the trading and partnerships that are taking place here. If you look at Microsoft and how they're stepping away from Altman and, you know, there's just the constant rotating dance partners and who's doing what, what's your mission is keeping that,

form of magic, keeping that attention of the markets, it's tough to do. - And who better than that than Johnny Ive? And keep in mind, when he left the company, it was a brain drain within the design group, 'cause again, he brought over two very top executives, Evans Hankey, his successor over there at Apple,

brought her into this and he named them by name. That video that we were just watching yesterday, he said, "We came up with it. We've kind of cracked the code to what an AI device should look like." - Why did he leave? Why not do that within Apple? - There are so many rumors about this. There's a really good book about this by Trip Mechel over at the New York Times, kind of talking about this schism between the Johnny Ives school of thought designed for Steve Jobs school of thought

operations-focused Tim Cook, which again, massively successful, right? - We still need to know what it is. And if it's some implantable thing, what difference does it make? What kind of design it is? - Exactly, but can you imagine if this thing is a flop, how embarrassing that would be? - I would think, but how much of it is, the one thing I was gonna suggest that I was fascinated by was if you watch the video,

the design aesthetic, even of the video, is gonna change the aesthetic and the feeling of ChatGPT and OpenAI. Meaning, part of what I think Johnny and his brilliance

this sort of sense of humanity that he actually brought to Apple, that the devices felt human in a way they didn't feel technical. When you see a Google device, for example, or back in the day you saw a Sony device or whatever, it felt like some kind of electronic thing. Is it going to be a robot? It sounds like something more personal. That's at least what they're saying. But I think he's going to do that to the entire company.

And that's the bigger point. Because Love From, which is kind of separate from this I.O. company that got, is going to be the design leader for all of open AI. I read that as even the apps, not just the hardware. But you could feel it in the video. It was like, it's a feeling, it's a vibe, and that's very hard to capture. And it's very clear he sees Sam Altman as a Steve Jobs type of figure, where he did not see that with whatever he saw going on at Apple. There's a reason he got out of there before that Vision Pro launched.

Clearly did not like what was going on, wanted to do his own thing, and now he's done it, and he's saying, I designed the best thing since the iPhone, and I'm not going to make it for Apple. I'm going to make it for you, Sam. That's super fascinating. Steve, thank you. Troubling. Overnight, officials say two staff members of Israel's embassy in Washington, D.C., were shot and killed outside of the Capitol's Jewish Museum last night. Washington Police Chief Pamela Smith said the suspect shouted,

free Palestine while in custody and implied that he committed the shooting. The suspect was identified as 30-year-old Elias Rodriguez of Chicago. Smith said he was observed pacing outside the museum before the shooting. The victims were named by the Israeli embassy as Yaron Lashinsky and Sarah Milgram. Earlier, Israel's ambassador to the U.S. said that they were a couple of

Terrible. Terrible, terrible, terrible, terrible. There's nothing else to say. No?

There's not. We know them. I mean, I don't want to get into it, but in this case, hopefully we do not hear from legacy media that we're still trying to figure out what the motive was, because that's what we hear every single time when it's so obvious what a motive is and they just won't ascribe it to that. But by yelling free, free Palestine, I think we know. Can we just write it down? We know. We know what it was.

Nike planning to raise prices now on a wide range of footwear, apparel and equipment as soon as this week. A source telling CNBC that prices on apparel and equipment for adults will increase between $2 and $10. The hikes cover a large part of Nike's products assortment, but many items will remain the same price. In a statement, Nike said, quote, we regularly evaluate our business and make pricing adjustments as part of our seasonal planning. The company said, quote,

I should almost add, of course, did not say the decision was related to tariffs, but

was likely related to tariffs. Separately, Nike planning to resume selling on Amazon after a six-year hiatus. Nike saying it's investigating in its investing, I should say not investigating, investing in its marketplace to make sure the company is offering the right products wherever consumers shop. So that's actually an interesting development. Because I like Amazon and it just makes life easy, but you can't buy a lot of Nike stuff there. It's the season of tariffs. This is seasonal planning. It doesn't go beyond that. I don't know what you're trying to insinuate, but...

It's the season of tariffs. It's planning for the season.

After 21 straight hours of debate in the Rules Committee and 42 pages of amendments to win over hesitant GOP lawmakers, President Trump's big, beautiful tax bill passed in the House of Representatives. This is definitely a huge victory at this moment for Speaker Johnson. Reporter Emily Wilkins watched the vote second to second in D.C. alongside our gang in New York. On this vote, the yeas are 215, the nays are 214.

with one answering present. The bill is passed. There it is. The Speaker Johnson himself is standing up at the podium. There's the gavel. Vote's closed. And you hear the applause on the floor. So they have gotten that passed through the House. Next step is to move on to the Senate. We'll see how they handle with that. Did you see that smile? And now we get to watch

The markets. And I don't expect much. I think the markets probably figured this was going to happen. Probably. I mean, I guess the place to look would be the Treasury markets at this point. You can see the actually we've cut some of the losses for the Dow. We were down by about double that down by about 45 points before 30 years, actually picking up that yield by about five point nine percent.

Tenure looks like it's right around the same as where we'd been. And the two years just above, maybe a couple of, yeah, 401. So it's still in the same. What's the timeline for how long will it take the Senate? Emily, you can't say for sure, but...

Well, no, we have a timeline because we know what the deadline is, right? We know that this bill would raise the debt limit, so we know it's going to be the X date. The way I've heard it laid out to me is that the thought is kind of give Senate the month of June to be able to go through the bill, debate, discuss any changes, have them move it then, come back

with the House, maybe end of June, early July, work out anything there and make sure that they're able to get this passed before the X date or, of course, before they go on their August recess, which they are very protective of. Make sure they're not going to hit that debt ceiling. So that's the timeline right now. Emily, thank you. Emily Wilkins, watching as that vote goes down.

Next on Squawk Pod, one of those one-time Republican holdouts, Texas Representative Chip Roy, who voted yes on the tax bill. I didn't get everything I wanted. I think there's some other stuff that I hope the Senate might address, both on deficits and on the Medicaid issue. That and more when we come back.

Don't just ride the index. Seek to outperform it with FELC, the Fidelity Enhanced Large Cap Core ETF. Unlike passive ETFs, FELC is run by a team of experts to adapt to market conditions and pursue upside potential wherever it's hiding.

And while you get the potential outperformance of an actively managed fund, you can still buy and sell it on your terms, just like any other ETF. Discover FELC, the Fidelity Enhanced Large Cap Core ETF, part of Fidelity's suite of active ETFs. Learn more at fidelity.com slash FELC.

Before investing in any exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, an offering circular, or, if available, a summary prospectus containing this information. Read it carefully. While active ETFs offer the potential to outperform an index, these products may more significantly trail an index as compared with passive ETFs. Fidelity Brokerage Services, LLC. Member NYSC SIPC.

The rural way of life is about making everyone feel at home. Tractor Supply chose advanced 5G solutions from T-Mobile for Business to transform intelligent customer service. Together, we put the power of AI to work across 2,200 stores, keeping things running seamlessly inside, curbside, and countryside. This is elevated customer experience. This is Tractor Supply with T-Mobile for Business. Take your business further at T-Mobile.com slash now.

How will you shape the future of industrials with confidence? Whether you need to define your strategy, optimize your supply chain, or keep pace with data-driven manufacturing, EY professionals understand industrials and the sectors they supply, bringing the insights that deliver real outcomes. With a full spectrum of services, EY helps strengthen your business from factory floor to product development and beyond. So when the global market shifts, your business is agile enough to adapt. EY.

EY, shape the future with confidence. Welcome back to Squawk Pod from CNBC. On the day House Republicans have passed, after an all-night session, President Trump's key legislative agenda, a massive tax bill. And I encourage our Senate colleagues to think of this as a one-team effort, as we have, and to modify this as little as possible because it will make it easier for us to get it over the line ultimately and finished and get it to the president's desk by July 4th. And that's a big thing.

Here's Becky Quick. We are joined right now by Congressman Chip Roy of Texas. He voted yes on this bill after being one of the very big sticking points along the way with this. Congressman, thank you for joining us this morning. I just want to go back to where you were yesterday.

You know, 36 hours ago versus where you are this morning. On Tuesday evening, you were saying that you hadn't decided what you were doing. You said we're in a better spot than we were a week ago. We're in a better spot than we were 48 hours ago. But there's still a lot of things we're ironing out. So what got ironed out to get you to yes?

Well, thanks for having me on. I mean, yeah, it's great to get the bill done. And by the way, I agree with my friend Warren Davidson, who makes very good points that there are far too much. There's too much spending and too many deficits in the near term and in the front load and too much savings in the back load. He's correct. That's one of the things that I think the Senate ought to address. But we moved the needle a lot in the last 72 hours.

We got pretty firm commitments yesterday from the White House in the form of legislative language to help the non-expansion states under Obamacare get some additional support to try to prevent the pressure on Texas and Tennessee and Florida to expand. I think that's bad for the country. So we got 110% plus up on the state-directed payments.

which is important. We also got some commitments out of the White House to make some other changes that they might be taking some actions on at the executive level that we'll see, I think, in the coming weeks. And we were importantly able to make sure the Inflation Reduction Act had stringent requirements on construction. So within 60 days of enactment, if you're not constructing, you're not going to get subsidies.

and at the back end on in-service. What that means is, in short speak, it tightens down the number of subsidies that could possibly go to any more of these plussed-up wind and solar projects, which are making the grid less reliable. So those were all really big, important wins for us. I didn't get everything I wanted. I think there's some other stuff that I hope the Senate might address, both on deficits and on the Medicaid issue, with all of the ridiculousness of the FMAP and provider tax games they play that's a money laundering scheme that I think we can still improve.

But we got a lot of work to do still in the Senate and to bounce back to the House. Right. If the Senate changes anything, the House has to vote again. And the Senate is not necessarily all that concerned about the very fine lines that you all have drawn. Where do you see push come to shove here? What happens? What happens if the Senate changes it and it ends up spending more money than the bill the House just sent over?

Yeah, well, I think that would be a bad thing. I mean, again, I think if we learned anything from those guys in the so-called salt caucus, when they were pushing to have a higher cap on their high, you know, to protect their high local tax and state tax jurisdictions, that we're going to be pretty strong on some red lines ourselves. The fiscal hawks saying, look, guys, don't come back and send us a bill that's going to ratchet up deficits. We can't have that. And by the way, I think the overriding governing principle ought to be watch the bond markets. Let

Let's do our job to make sure that we can have the liquidity and the capital that we need and bond markets that are strong. We've been seeing a lot of issues in recent days. We saw the Moody's downgrade. Our nation needs to have fiscal discipline from its leadership so the bond markets can have faith that we'll have stable markets going forward.

And I think that ought to be really governing everything we do. And most business leaders across the country should agree with that. We need good tax policy. We've done some of that in this bill, but we also need to have spending restraint. And that's been one of our governing principles here. My friend Jody Harrington, the Budget Committee chairman, those of us who created a structure in the budget to say, guys, we love tax cuts, but we're going to tie them to the spending cuts.

The Senate better not break that deal because that was the deal that got us through the House. And we need to do even better. We need to, as I said, Warren's right. We can't have a front-loaded spending and front-loaded deficits and then have the savings in the out years. We need to start at the beginning. Congressman, you must constantly have to keep repeating yourself. Don't let the...

The perfect be the enemy of the good because just listening to you talk about how you we have made it a little bit harder for Texas and Florida to do the same thing that you're not reversing at all in all those other states. And I know that that's what that's what you'd like to do. And, you know, you have the presidency, the Senate and the House.

And already the reason you can't do more is because you're already worried some members are worried about two years from now. What's the Senate's problem? Those guys, those people have more time. They're going to dilute this probably even more. Why don't they have the intestinal fortitude to act like what Republicans are supposed to do with Medicaid and rein some of this? This bill coming back is probably going to be a nightmare.

Yeah, well, we'll see. Look, you're right. They have six-year terms. They can afford to be bold. I think some of my good friends over there, like Mike Lee and Ron Johnson, Rick Scott, my former boss, Ted Cruz, my former boss, John Cornyn, those guys, I think hopefully they'll all get together and start tugging it to the right. And look, we've got to make sure the Senate does a good job. We did a good job getting it through the House. The Senate needs to keep that structure, but then make it better. And you alluded to the Medicaid situation here for Texas, right?

and other non-expansion states. We need to do better than we did. We got a big win yesterday when we were at the White House, getting us to get 110% plus up for the non-expansion states on what's called state-directed payments. But we still haven't addressed the fundamental fraud, the scam, that is the combination of the 90% FMAP along with the provider taxes, which for those, if you're watching this, you don't know what all that means.

It's basically saying that we give seven times more money for the able-bodied than the vulnerable. That's not President Trump's message. That's not what the American people want. So I think we can make those changes. We've been educating the Senate and the House during this process. The Senate's very interested in dealing with these issues. So we'll keep working on it. That's the way the process is supposed to work in a bicameral system like we have in this republic.

Congressman, it sounds like you took a page or two, you said, from the SALT caucus where they held out and got what they wanted and refused to vote yes until they got to that point. It sounds like you were going to take that same sort of strong-arming when and if the Senate bill comes back.

Well, look, it's a combination of things. We didn't draw red lines on purpose because we didn't want to hamstring our leadership too much. But we did create a framework and we were very strong in saying, guys, we need to address Medicaid. We need to address the Inflation Reduction Act. And you know what? We got a lot. We got a lot of really good stuff in that. So we will continue that way of doing things. But I do think we will draw a few red lines.

because we learned a little bit from the Salk Caucus. They're like, look, guys, we're going to get our state and local tax or bust. And guess what? They got a $40,000 pop that's $350 billion worth of cap increase. That's really expensive. I'm not so sure the Senate is going to just say thumbs up to that, right? The constituency in the Senate for the Salk Caucus is not as strong as in the House. So we've got a lot of work to do and going back and forth. But in fairness to those guys,

When it comes back to the Senate, we've got to pass it through the House, too. So we all got to work together to make sure we deliver for the American people and for the president's agenda. You mentioned, I guess you would call it the yippiness of the bond market this morning, the 10 years at 461, the 30 years at 514. Is that something that others in Congress are paying attention to at this moment? I mean, you've been...

That that same fiscal hawkishness for a long time, it's a different thing when you have the bond market backing you up a little bit.

Well, I hate to say that I guess it's helpful that what we're seeing in the bond market at this current moment, it is a little helpful. Obviously, I want to see the bond markets get healthy and strong. But look, the bond markets are reacting. You cannot condemn their other forces, Japan. And there's a lot of things going on in the world. And if the president moves his agenda, I think you'll get some more stability in the markets. But we've got to demonstrate to the world that we're going to be responsible.

And this bill, by the way, I got to be honest, we took a step. But man, we got a long ways to go. We're still going to have something like $56 trillion in debt if we even do the House bill that has the spending restraint that we had to fight like cats and dogs to even get over the last three months. Remember when the Republican leadership came out in like February, January, they were talking about, well, maybe we can cut $300 billion.

Look, we got almost $1.6 trillion in spending restraint because some of us said, nope, that's not good enough. We're going to force everybody to the table. In my view, we should do better. And we should, as I said before, front load that spending restraint. But the bond markets, to answer your question, are very much front and center for leadership in this country. I think it should be more front and center for every member of Congress. Congressman Roy, thank you. And hope we get to talk to you again soon. Yes, ma'am. Thank you all so much.

I guess you could do it. Seems like you need a physical therapist, but apparently not. Digital physical therapy startup Hinge Health. Pricing its IPO at $32 a share. That's the top end of the range.

a hinge selling about eight and a half million shares and raising close to 275 million dollars in the offering at the ipo price hinge is worth about 2.6 billion dollars though that a number could be higher on a fully diluted basis that's down from a private market valuation of 6.2 billion dollars in late 2021 it's set to debut on the new york stock exchange under the symbol h-n-g-e and don't miss the company ceo on money movers

on cnbc apparently later this morning and a first on cnbc uh interview so do you how does it work it's a personalized program where you get unlimited exercise and stretches that are developed for you by a physical therapist it sounds like it's tells you what to do what to do but i think i need someone to on your phone you would have somebody right but if it's really hard and you're trying to get a knee back in shape or something don't you think you need someone there to

Come on, do it. You can do it. You can. I'd stop after two reps. Well, this is for people who have been injured or things. No, I understand. But it's very painful. Oh, in an idealized world, the idea is that this is ultimately, hopefully, a lot cheaper for people to use and more accessible. And that's the whole idea. But the human element of physical therapy is, I don't think you can discount that either. I'm not discounting. I'm just saying that if this was able to democratize...

I mean, most people can't afford physical therapy. They can't afford to get to the physical therapist. I understand. I understand. You know, and I've said it before. People made fun of me about when I say I have a trainer. I wouldn't even show up over there if I wasn't going to pay this guy what I have to pay him. And everything he tells me to do, every time he says do this, I say, I hate this exercise. And it's every single exercise. And that's the only reason I'm there. That's the only reason. You know what I'm saying? I need. I totally get it.

We got to get you in one of these pools. Do you know about these pools that people do? Like a swimming pool? No, it's these money pools. Workout pools. If you hit your objective? Well, it's like a competition in these groups of people for money. So people actually do go to the gym because they're trying to get their numbers. Tees will be next.

Still to come, news you can use, the points guy, Brian Kelly, making your travel dollars work for you. Your frequent flyer miles are insurance policies. So if I'm at the airport and I start seeing a creeping delay, I burn miles for another airline out of a different terminal or even the same one later. The airlines are not talking to each other. They're not talking to each other. Squawk Pod, we'll be right back. How will you shape the future of energy with confidence? What does it mean to deliver affordable and reliable energy for all?

From evolving supply and demand to pricing uncertainty, EY understands the disruptions energy companies face and how to drive the outcomes that matter. So whether it's in the plants, at the pipeline, or on the grid, EY's full spectrum of services help energy companies maximize operations to drive profitability and performance. EY. Shape the future with confidence.

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.

This is SquawkPod. Up and Andrew, cue.

You're watching Squawk Box. I'm Andrew Ross Sorkin along with Joe Kernan and Becky Quick as we reset for a brief moment. AAA forecasts a record 45.1 million Americans will travel at least 50 miles from home this Memorial Day weekend. Our next guest has new data on what's ahead for the summer travel season and the consumer. Join us now, the Point Sky founder, Brian Kelly. Like everything, all the numbers we get, maybe they're going to eventually soften, but

You seeing anything, any evidence right now? - Yeah, Americans are still traveling, but what the airlines need are those premium customers paying a lot of money to fly to Europe. This is when they make a lion's share. - That's not happening. - It's not necessarily not happening, but you know, April is a time when a lot of luxury people say, "I'm pulling the trigger on that Europe trip." And I've talked to a lot of luxury travel advisors who say, "People are still on the sidelines.

And we've actually, we worked with a firm called Points Path to look at airfares domestically and internationally for this summer compared to last year. And we're seeing 7% down international, which is a little bit, that's not great news for the airlines.

At the same time, we're also seeing the airlines, American Airlines is running a huge fair sale as low as 5,000 frequent flyer miles for travel in August and September. I've never seen the summer travel season start off with such a fair sale for domestic. Not since COVID. It's not catastrophic though, but there is softness for sure. But in terms of what people are going to spend, one in three Americans plan to spend more.

37% the same. So that's, I'm gonna add that up. What is that? 71% the same or more. - Yeah, so it's definitely not crashing. And certainly, you know, the numbers that came out in March about the decrease in visitors that everyone was, you know, panicking about, well, that was really mostly due to the Easter holiday that fell in April of this year. So there wasn't this catastrophic, you know, Europeans are no longer coming to the US.

But I do think a key trend, people still want to travel. That's certain. We did the same poll in January. The number's about the same. I think a lot more people are going to stay in the US this summer. In Caribbean. They can drive around. Yeah, gas prices are down dramatically from last year. I have some news you can use questions for you, which is, especially for those in the New York area that are flying out of Newark,

There's a question and a lot of folks on TikTok and all the things that you play on about people who have flights in Newark that are then booking, trying to book refundable tickets out of like JFK or LaGuardia at the same time, same day. And they're talking about how the airlines talk to each other and will cancel both of them.

True or not? That's not true. In my experience, because I always do that, if I'm at the airport, that's why I tell people your frequent flyer miles are insurance policy. So if I'm at the airport and I start seeing a creeping delay, I'd burn miles for another airline out of a different terminal or even the same one later. And then you can cancel all the major U.S. programs. You can cancel up until departure. Right. So if you're smart, you just have to remember to cancel. But the airlines are not talking to each other. They're not talking to each other? Only if you do it on the same airline, they'll see the dupe booking and then they'll automatically cancel.

Okay, this is news you can use because there's people having this conversation all over the place. That is fascinating. One other thing. These ghost flights, that's a new thing which I never focused on. The people are flying to... They basically fly to a...

place with a connection, but they really never take the actual second part of the connection and that that part is cheaper. I don't know if I'm explaining that right. So what's it called? It's called skip lagging. And it's because airlines price flights based on your origin and your end point. So you can throw in a cheap, like if you're flying between big business hubs,

you throw in a cheap ticket to Rochester, you could fly Charlotte, New York, New York, Rochester, but that ticket can be half the price of just that Charlotte to New York, 'cause all the bankers are on that flight. - Do you get in trouble if they realize that you always-- - Yes, so once or twice, probably not gonna be a big deal, but the airlines hate skip lagging. It's not illegal, you're not going to jail for it, but if you have a huge freaking flyer balance and you keep doing that, they can come close your account, ban you, so you do have to...

you know be a little careful this is the stuff i'm trying to figure out any and never check a bag doing that because if you check a bag they put it to the final destination any effect from the horror stories out of you know right across the river newark you know i wish i could say it's getting better but just this week they reduced even more yeah you know the faa really needs to step in because right now newark uh is a level two airport meaning it's uh the airlines just have to do their

do their best. It's not controlled like JFK and LaGuardia where the FAA will say, no, you only get this number of takeoffs. So United has been saying, well, hey, we're reducing, but no one else is. And in fact, Saudi Arabia. So there needs to be a lot more control there. But I mean, the bottom line is what's happening at Newark can happen anywhere. I mean, we have to overhaul the entire air traffic. FAA allowed this to happen. Yeah. And, you know, you can be

- You can point fingers. I know in the past, other administrations have tried, this is a huge budget issue, and every time it comes through Congress, Congress does what Congress does best, and we keep kicking the-- - But New York in particular is a problem because they took it out of the New York flight space and moved it to Philadelphia. - Correct, 'cause they moved it to Philadelphia. So they took this old rotting system and then moved it into another old rotting system. - And took less than 75% of the staff to then take care of the same amount of the issues. - The other day there were like four people and there should have been 12.

I'm personally avoiding it. - Yeah, some weird conversations. So with 70 landings, it's safe. 56 is safer. So what does that mean about the first safe? And would 40 be even safer than the 56? - Yes, the fewer landings-- - It's either safer or it's not safe. I don't like hearing safer. I want safest.

And that is SquawkPod for today. Thank you for listening. SquawkBox is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern, or get the best of our show right into your ears when you follow SquawkPod wherever you get your podcasts. And if you like what you hear, let us know. Rate or write a brief review of SquawkPod on Apple Podcasts.

We love hearing from you and it helps other listeners discover us. Have a great Thursday and we'll meet you right back here tomorrow. All right, clear. Thanks, guys.

Hey everybody, Conan O'Brien here with an ad about my podcast, Conan O'Brien Needs a Friend. I've had so many fantastic conversations with people I truly admire, people like Michelle Obama, Bruce Springsteen, Maya Rudolph, Tom Hanks. New episodes are out every Monday and we have a really good time. So subscribe and listen wherever you get your podcasts.