Transportation Sec. Sean Duffy on the Shutdown’s Impact on Air Travel 10/7/25

0:00Bring in show music please. Today on Squawk Pod, the government shutdown hits its seventh day. Transportation Secretary Sean Duffy joins us as concerns rise that furloughed federal workers won't get back pay after a reopen. Let's not use this as leverage with hard-working Americans that keep our sky safe for political benefit. And the critical infrastructure keeping planes safe in the sky. The software that manages the airspace is kind of like we're running Windows 95 or Windows XP. That's the genre of software we use for air traffic control. We need a new software system. How good does your boss feel about how things are going in the economy?

0:43KPMG CEO Tim Walsh with a survey of 400 corporate leaders. CEOs are becoming more confident with this dynamic of just constant uncertainty, to be quite honest. And sentiment in a quickly changing workplace. When I was hired at KPMG, I was assigned to the copy machine. Becky Quick is joined today by Robert Frank and Mike Santoli on the massive OpenAI and AMD chips deal we're still talking about. It's really kind of OpenAI that's driving a lot of that, so it's kind of a one-legged stool. And a new partnership in prediction models. It's this mashup of betting, trading, investing. You won't miss a headline.

1:26I'm CNBC producer Zach Felici. It's Tuesday, October 7th, 2025. Squawk Pod begins right now. Stand Becky by in 3, 2, 1. Cue it, 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 Mike Santoli and Robert Frank. Joe and Andrew are off today, but gentlemen, it's really good to have you both here. Be here. Thank you for coming in. A day of records, at least for two of the major averages, the S &P and the Nasdaq, once again. We're continuing to watch this climb. And, Mike, you've been watching this for some time.

2:02Anybody who's been betting against it has been wrong. Yes, the conditioning has been pretty ingrained at this point, that the mistake has been to fade the AI enthusiasm, to think that we needed a broader pullback, and to feel as if all that good news was priced in. Now, what was interesting yesterday, and we get into it over the course of things, is that it showed you both the power of one of these open AI announcements with AMD, but also the limits, because it did not exactly create a feeding frenzy across all technology. It was very much localized in the food chain, AMD, and directly impacted areas.

2:35And then, of course, we're never going to be able to escape these questions about where's the money coming from, ultimately. And we can talk about that. We will talk a little bit more about this, because I do have some questions. I listened to that interview yesterday with Lisa Su. Great interview. Hearing all the things with Brockman from open AI, too. but I've got serious questions about what this means. You've got to give away 9 % of your company in order to get to play the game here? That's basically the way it's set up. 25 % up? But it's multiples of AMD's current revenue rate. If all of these orders come through.

3:03If they come to fruition. If OpenAI, which of course is cash flow negative for years to come and has to raise the money. Although Lisa Suf said it'd be accretive immediately. I think it's an important day for the AI industry, right? What we're seeing is there's just a massive demand for more compute. I mean, there's so many applications for AI. There's so many places where we'd like to see it used. And, you know, compute is the foundation of that. Sure. I mean, if the order, exactly, if the orders come through. So, I mean, I think it's really fascinating. People have pointed out NVIDIA is doing the opposite trade with OpenAI.

3:36It's investing money in OpenAI as part of this partnership. Yeah, it's just weird to kind of look through and see how it all works out and how both of them seem to make sense to the markets right now, at least. Yeah, and just stepping back, if you look, the FT has a good piece of adding up all of the open AI deals, whether it's CoreWeave, whether it's Oracle, whether it's NVIDIA. And this sort of daisy chain of financing where they're all increasingly reliant on each other. And you couple that with the fact that this entire market is now 80 percent dependent on these sort of handful of AI stocks.

4:09Even within that handful of AI stocks, it's really kind of open AI that's driving a lot of that. So it's kind of a one-legged stool at this point. Well, it's true. I mean, first of all, you have Microsoft, Amazon, Alphabet. They're actually deploying all their free cash flow in this direction. So that's real money, and it's going into the system. What is interesting is OpenAI really seems to be trying to say, they're going to press their head start and their advantage and say, these are scarce resources. We're going to create a blocking position here. We're going to raise the ante for everybody else.

4:41Nobody will be able to get it. Even if we're too ambitious in terms of what the size of the ultimate investment is in the market and the need for it, it's a bit of a land grab. And you sort of portray yourself as being the one who's kind of dictating the terms. There's no indication that there's going to be any shortage of capital anytime soon, whether it's to increase the valuation of OpenAI or to fund these data centers or anything else. I mean, I cover the wealth space, and it's the only thing they want to invest in right now. It kind of doesn't matter how or where they're going to invest in it.

5:16They just want to be in it. And they know there's going to be a shakeout, but they know that they have to be in it. It does suggest OpenAI has kind of outgrown the private market, traditional, just, you know, you've got your venture backers. They're doing these partnerships with everybody. Private credit is now directly financing construction of data centers. It's becoming a little more debt financed. But you're right. I mean, the capital just wants to be here. You need mega caps or countries to finance it at this point. Yeah, that's kind of the way it's going. Well, let's give you the details on all this that we're talking about.

5:44We're watching shares of AMD this morning. The chipmaker stock skyrocketed nearly 24 percent yesterday on a deal with OpenAI. It will see Sam Altman's company deploy huge numbers of AMD's instinct graphic processing units over multiple years. OpenAI could also eventually take a 10 percent stake in AMD. The chat GPT maker said the deal was worth billions of dollars, but it declined to disclose a specific dollar amount. Other chip-related names also getting caught up in the frenzy. Applied materials gained 3%. Micron was up more than a percent and a half. The popular SMH semiconductor ETF was up 2%, a lot of that AMD, of course.

6:21And it did hit a new high. NVIDIA fell about 1%, kind of this idea that this at least was a market share gain on a net basis by AMD. Yeah. Again, we'll talk more about this as we go throughout the show. It's all the markets are focused on at this point. It's all investors, especially the wealthy investors, are focused on, as Robert said. In the meantime, we're still continuing to watch the government. President Trump teasing what appeared to be progress on a path to reopen the federal government before walking back those comments. Yesterday, the president told reporters that health care related negotiations with Democrats were taking place.

6:58We have a negotiation going on right now with the Democrats that could lead to very good things. And I'm talking about good things with regard to health care. Are you speaking with Democratic leaders? Well, I don't want to say that. I don't want to say that. But we are speaking with the Democrats and some very good things could happen with respect to health care. Then in a post on Truth Social, Trump said he would work with Democrats only after the government reopened. Democratic leaders in Congress said Trump's claims of talks weren't true. This morning, Axios is reporting that a draft White House memo says furloughed federal workers won't necessarily be eligible for back pay when the government shutdown ends.

7:38That's always kind of been what's happened before. Those government workers would get back pay for no longer, no matter how long they'd been shut out of work. It's put contractors at a big disadvantage. If you're a contractor, you don't get back pay for being out of work. In the meantime, the FAA is saying that staffing issues are starting to cause delays at several U.S. airports. This is hours after Transportation Secretary Sean Duffy said the number of air traffic controllers calling in sick has risen slightly since the government shutdown began. Air traffic controllers and TSA agents are not being paid right now, and they are set to miss their first paycheck next Friday.

8:13All right, now to the back and forth in the Senate to try to end the government shutdown. Emily Wilkins joins us now with the latest. Morning, Emily. Morning, Mike. Yeah, President Trump said he was open yesterday to making a deal with Democrats on extending those Affordable Care Act tax credits that opens up a potential off-ramp here for the government shutdown. But Trump did come back, caveat his comments with a post on Truth Social, saying that he was happy to work with the Democrats on their failed health care policies or anything else. But first, they must allow our government to reopen. And that stance from Trump mirrors the stance of a number of Senate Republicans that I spoke with last night.

8:51All of them said they're open to talks, but they're on hold right now until the government reopens. And Senator Susan Collins is actually circulating a plan that promises to address those health care subsidies once the government is back funded again. Now, Trump is not the only Republican who actually seems interested in an extension. We've certainly heard from a lot of moderate Republicans who are interested. But last night, Congresswoman Marjorie Taylor Greene tweeted that while she is not a fan of the Affordable Care Act, something needs to be done about those expiring subsidies. She posted that when the tax credits expire this year, my own adult children's insurance premiums for 2026 are going to double, along with all the wonderful families and hardworking people in my district.

9:37Nearly 11 percent of those in Greene's Georgia district are enrolled in the ACA marketplace. That's according to the Kaiser Family Foundation. But for now, the shutdown stalemate is continuing. The Senate voted again and failed again last night to fund the government. But one of the crossovers who had voted yes, main Senator Angus King, he's an independent, but caucuses with the Democrats, said he's now considering changing his yes to a no if Republicans aren't more forthcoming with discussions over those health care premiums. Another vote on the temporary funding is expected today. And guys, at this point, we expect that one to fail as well.

10:15But of course, we'll be keeping a close eye to see if there's any breakthrough in these negotiations. Mike? Yeah, Emily. So obviously, Democrats want some kind of solid assurances that there would be true negotiations on this if the government were to reopen. But isn't there also a tricky thing about the timing where, you know, Democrats feel as if maybe the urgency would pass if the renewal period were, you know, were to come and people wouldn't necessarily see the likely increase in premiums? It just feels as if everyone is kind of pushing for a particular tactical advantage along that front.

10:49Mike, it's a really good question, because if you look at sort of when these marketplaces open and the notices go out, it is indeed November 1st. What I've heard from a couple of sources who I've talked with, they said, look, even if Congress passes a fix after that, a lot of these companies can kind of go back, redo the price. There is a lot of question about exactly how that would work. But of course, I mean, if you've watched these negotiations take place on Capitol Hill before, it is very difficult to get an agreement done, especially one that would need to be bipartisan, as this one would need to be the one that already has some pushback from a number of conservatives and Republicans on Capitol Hill.

11:27So it would take time to get an agreement done. But Democrats, I think at the end of the day, they know that the tax credits expire at the end of the year. There might be impacts that are felt before then. But the end of the year is truly the actual deadline to extend these. And I think that's what lawmakers know they need to work for. All right, Emily, thank you. All right, some news for you this morning. New York Stock Exchange owner Intercontinental Exchange is in talks to invest$2 billion in polymarket. That's according to a Wall Street Journal report that says that the deal could value the crypto-based prediction market somewhere between$8 and$10 billion.

12:03The prediction market is one that has been closely followed in the world's politics because of what they had been predicting before the election last time around. It's been off limits to U.S. users since 2022 in a deal they cut with the CFTC under the Biden administration. But it's a big company that's funders include Peter Thiel's Founders Fund. Donald Trump Jr. is on the advisory board, has been since August, and his 1789 capital is one of their investors as well. You can see that stock for Intercontinental up by about 3.5 % on this news and we'll continue to keep an eye on it. The Colshy is obviously the other prediction market that's been in the news that Robinhood is now funneling order flow with the Colshy.

12:46It's a workaround for sports betting bands in some states because it's prediction, it's not sports, and it's this mashup of betting, trading, investing. But Poly can't yet do sports, right? Right, I don't believe so. But there seem to be fewer rules than there were at one point. Let's take a look at Tesla's shares this morning. They gained more than 5 % yesterday. The EV maker expected to unveil a more affordable version of its best-selling model Y SUV today. That came after Tesla posted a cryptic video clip on X over the weekend. But any new car's driving range and price are still unclear. That stock did well.

13:28Elon Musk still hovering around that half trillion dollar net worth level. Look at a longer term. Maybe it's made a peak in this area two prior times, five over the last five years. OK, but there you go. Yeah. Up 80. So it's kind of getting up in that direction. And, you know, a little bit of a sell off after the delivery news last week, but hasn't really done. But it's picked up steadily since he left the Trump administration. Oh, for sure. And then they got the compensation package that needed him back to the company. I'm sure it's pure coincidence that he teased this big announcement on the day that Sam Alton was having his big party for opening office.

14:05I didn't even think that was a good idea. You know, my cynicism exceeds yours. Not that they care about each other as rivals or anything like that. Tease will be next. Coming up, the impact of the government shutdown on air traffic controllers. Transportation Secretary Sean Duffy. The controllers are stressed out, right? So they work overtime. They work six days a week. Tough job. They're concerned they may not get a paycheck. They'll eventually be paid, but the shutdown is forcing them to work without the guarantee that their paychecks come in in a timely manner.

14:42This is Squawk Pod. Up on Becky. Q. You're watching Squawk Box right here on CNBC. I'm Becky Quick along with Mike Santoli and Robert Frank. Joe and Andrew are on assignment today. NBA superstar LeBron James sparking a flurry of speculation yesterday after posting a nine-second video on X and teasing his, quote, second decision today at noon Eastern. The video mimicked the look of the decision from the TV special from 2010 in which he revealed he was leaving the Cleveland Cavaliers to sign with the Miami Heat. The 40-year-old star hasn't revealed whether the upcoming season will be his last in the NBA.

15:20He's the all-time leader in points and minutes played. If he wants to follow the Michael Jordan playbook, you've got to retire once. And then come back. Right. Play for another team maybe, come back, maybe find another sport too. What would it be? Lacrosse for LeBron? Isn't he a big entrepreneur? No, isn't he one of those Padel entrepreneurs? Is he an investor? Okay, so there you have it. There's his other sport.

15:48New Jersey's Newark Airport might already be feeling the impact of the government shutdown as concerns grow over not receiving their paychecks. Air traffic controllers have been calling out from time to time, delaying air travel control. There have been questions about TSA and whether those workers will continue to show up. But joining us right now is Transportation Secretary Sean Duffy. He was at Newark Airport yesterday, and he spoke to the air traffic controllers there. I guess Newark is just one of so many places around the country where you're starting to feel this. What did you hear at Newark Airport when you were there?

16:21So the controllers are stressed out, right? So they work overtime. They work six days a week, tough jobs. They're working on equipment that is sometimes 20, 30, 50 years old. And so they're concerned. They're family people. They've got houses, mortgages, car payments. They have to put food on the table. They're concerned they may not get a paycheck. They'll eventually be paid, but the shutdown is forcing them to work without the guarantee that their paychecks come in in a timely manner. So they're stressed. There is a question about that now. We were just confirming from the White House that this memo that was leaked earlier about whether or not they'll actually be paid is true.

16:57I think there are considerations at the White House to say if you are furloughed, you will not eventually receive back pay like has been processed in the past. So if you're furloughed, you don't come to work, you don't get paid. So those who do come to work that are critical safety positions, I think they will get paid for the services that they provided to the country. So they will get paid, but a lot of them are saying, we might have to think about working six days a week and then going to drive Uber so we can get some dollars into our coffers to make sure we can put food on the table. What kind of pressure can you bring to try and clear things up more quickly?

17:32I mean, you're seeing on the front lines the pain that this causes. So, listen, it's my job to tell the controllers to show up for work. That is your job. You're eventually going to be paid. However, I have to advocate for them as well to say, listen, this is the reality of America. They are under pressure. They provide great services to us. And by the way, when your plane's delayed or you're canceled, they're the ones that are making sure that you don't fly when it's not safe. They're the ones that make sure we get to where we're going. And so I'm going to advocate for them. Again, let's open up the government.

18:04The conversations and the fights that are happening are about issues allegedly that are going to come to fruition at the end of the year. Open up the government, take the months to have a conversation and negotiate. But let's not use this as leverage with hardworking Americans that keep our sky safe for political benefit. Are issues popping up in terms of staffing shortages at various places that you've seen during the shutdown? So what we're seeing is I'm not seeing one location consistently controllers not coming into work. What I am seeing is a small blip in one facility and then that gets resolved and you'll see a pop up somewhere else.

18:42So it's not one facility consistently not having controllers come in. But we are seeing issues in the system. And again, you saw yesterday in Burbank multiple hour delays because we didn't have enough controllers to control that airspace. Do you think it's a union action? You think this is just frustrated employees or people who are actually sick? No, so the union was with me yesterday. Yeah, they've advocated not doing this. It's the union's job to make the case for their union members. They're great partners. I'm helping make the case for them as well. So, no, this is not a union action. Now, could you see in Burbank yesterday that everyone did a sick out?

19:17Possibly. I don't have that evidence right now. But it's not led by the national union. I mean, they're trying to advocate for the controllers to end the shutdown and get, you know, pay coming to the people that provide the services to the skies. Secretary Duffy, the shutdown is just exacerbating a situation that's been pretty untenable for quite a while where we just don't have enough air traffic controllers. So we're over 2 ,000 short right now. We don't have enough controllers. So a lot of our controllers work overtime. But what I've done is I've supercharged people coming into the business, right?

19:52But they make good money, 180 at the first end. At the back end, you know, in some areas like New York, you can make up to$400 ,000 a year with overtime. And so we've increased the throughput of the academy by 20%. We've decreased the time frame in which it takes to get a young person that wants to be a controller actually into the academy. It was taken over two years for a young person to apply to the academy to get into the academy. Well, if you're 23 years old, you're not going to wait around for two years to wait for your slot. You're going to go find another job. So we've decreased that time frame, and we're getting the best and the brightest in.

20:27But it's going to take time. It's going to take time to get— How long? Are we talking years? Years. Years. And so, again, in the first phase of this, we're 20 % up in controllers. We want to improve that next year. One of the problems with the shutdown, though, is getting them through the academy. they go to towers or TRACONs or centers, and they have to get trained up. And the support staff that's there to train the new controllers to get them certified, we're having issues with the funding to keep those people employed. So it has a ripple effect. At a time when we're trying to make up this 2 ,000 controller deficit, we don't have the staff in place to actually make sure these young people are getting trained into their facilities.

21:09And this is one of those areas that really upset voters when you start to see delays, or you even start to see concerns about safety as a result of this shutdown. When I was looking back at the 2019 shutdown in the first Trump administration, the event that caused that shutdown to end was the delays in air traffic and people's flights. What are you hearing from airlines? Are you starting to hear any complaints on the passenger side? What do you think it would take for that piece of it to be the catalyst that ends the shutdown? So my phone is the dumping zone for everyone I know to tell me that they're delayed or canceled.

21:45Listen, I don't want to see our air travel as a leverage point in this. I do think you need members of Congress to come together and figure out a path forward. And again, sometimes... What are you hearing from airlines right now? What are they telling you? They're navigating, right? So we haven't had significant outages. They can manage these issues. They manage weather. They manage staffing delays with air traffic controllers. They know how to do it, right? And they are doing it. and they make up the difference. But also, which is why airlines and air traffic controllers, we've had 63 different organizations that don't sit together to come and say we need to revamp our whole air traffic control system.

22:21We need$31 billion. I got$12.5 billion. But we need the rest of the money. So I want Congress to actually come. And by the way, a lot of partisanship in D.C., not partisanship in regard to this issue. They're going to find us the money. You spoke yesterday about the controllers being distracted by all these pressures that the shutdown is causing. And at least for me, there was a concern there underneath it that perhaps there was a safety issue. Are you worried that maybe you raised a safety issue when you really shouldn't be raising a safety issue, or was that intentional? It's my job to talk about what they tell me.

22:59And what you want, if they had a fight with their spouse, they have to leave that when they come into the tower. Yeah. And but they're they're being really honest to go. We're we're concerned. Our paychecks come a week from today. If those paychecks don't show up, how are we going to navigate that as as as heads of households? And again, we they're human. They're human beings. Right. They're they're just like everybody else are working men and women. And so I'm not trying to raise safety flags. I'm not trying to, you know, be chicken little here. But I am saying, hey, we're seeing issues in the system.

23:32Let's let's resolve it. And again, these are professionals. If there's issues in any of these centers or towers, we slow down traffic. Or we'll stop traffic. It's our job, first and foremost, to make sure you get to where you're going safely. And again, I don't want you delayed. I don't want you canceled. But I want you to get to where you're going to go safely. And that's why you'll see in Burbank, we had a major slowdown. Because we couldn't do it safely. And that has to be always the key is making sure people are safely traveling through the air. Sean, we've talked about this before, but why did it get to this position where we were 2 ,000 air traffic controllers short?