>> right, we did not get to go to cramer because he has sources and i am wondering if he knows of the timing for larry kudlow >> you can find out in about ten seconds. >> is he still on the west coast? >> okay. >> we'll send you over to him right now. happy anniversary to joe and penelope, "squawk on the street" begins right now >> good tuesday morning. i am carl quintanilla and david faber. >> rex tillerson is out as secretary of state to be replaced by cia director pompeo. the president heads to california today futures held in there this morning. europe is pretty flat. bond yields did drop slightly on the tillerson's news and the cpi this morning as been in line tillerson out, pompeo is moving

to stay. the trump administration block the biggest deal of all time broadcom is not going to be buying qualcomm. and the price target for ge goes lower, $11 over at jp morgan another shake up at the white house, the president tweeted mike pompeo, director of the cia will become our new secretary of state. he'll do a fantastic job thank you to rex tillerson for his service. gina haspel will become the first woman so chosen. congratulations to all >> what does this mean for investo investors? >> well, to me, tillerson again, he's got the steady hands and people who are respected in business community leaving but tillerson is probably may be one of the most respected executives, i never heard

anybody saying anything that he represents business interests over seas. may i point out that if you are involved with china, the one thing you may not want is a secretary of state from intelligence because of what david is about to report on the broadcom deal with qualcomm. >> um -- well, okay, we are going to talk about qualcomm jiw you think pompeo's background is an interesting choice. these are the relationships that we have with china >> yes, i think pompeo may stand for intellectual property theft. i see china's fingerprints everywhere meaning that the president is determined to figure out how the chinese are destroying our economy and how they are stealing our intellectual i think pompeo are a lot better than that than tillerson

>> of course, jim is referencing what is certainly one of the bigger story and one we have been following over the last weeks or so, i tried to become something of an expert in cfius. highly unusual that they got involved here. prior to broadcom even actually agreeing to a deal to acquire qualcomm as everybody knows at this point, yesterday late in the day, that committee recommended that the deal be stopped because o f national security concerns the president -- it went to his desk and he signed off to it it is a presidential decree as a result of that broadcom is going to have to figure out what it wants to do but certainly it will not be able to acquire qualcomm ever regardless if it becomes a u.s. company in the future. >> we'll talk more of what the options are for broadcom and intel down the road now that the

game has changed back to the tillerson news at least at the moment, eamon javers at the white house how this all went down what it says of the larger picture of turnover in the west wing >> yeah, carl, it is a larger picture of turnover in the west wing and not unexpected but still surprising to see a dramatic move here with tillerson out as secretary of state. mike pompeo from cia will move over to the state department and that's a dramatic move as well pompeo is somebody who has been seen here often at the white house as a very hands-on relationship when it comes to interacting with president trump. somebody that develops a really good report with president trump. so we are getting a statement from the white house, sarah huckabee sanders e-mailing me with an official statement from the white house. the president is saying that

that he's proud to dominate mike pompeo to be the new secretary of state, somebody that the president clearly trusts the washington post is reporting that this decision was made last week on friday if that's accurate, that's fascinate ng tering in terms ofe line we saw rex tillerson going out further ahead than everybody else in the white house in terms of that apparent assassination attempt of a russian spy living in britain the secretary of state willing to say that it appears to come from russia, not clear if it was from the government of russia but the assassination attempt originates in russia that was something the white house stopped short to say yesterday. it is clear that if rex tillerson knew at the time he said those comments that he already been dismissed as secretary of state, he was willing to go further as the white house is going just

yesterday on this. westerly we are waiting to wait some more as this news breaks about half an hour or so. >> if we believe that the president told tillerson he was out on friday then that comment about the russians seeming to square with the prime minister of what the prime minister of the u.k. said appears to be defiance than anything >> tillerson putting his pedal to the medal there in terms of backing up theresa may who says the u.k. president was going to give the russian government about 24 hours to respond and providing explanation for this otherwise the u.k. government was going to assume that it was the russians the question of that potential assassination attempt is a fascinating and complicated ones if the russians did under take that sort of active measure on british soils, it is disturbing development on its phase

it raises a question whether the president wants it to be seen as a wider signal it seems like not a whole lot of effort by whoever did that it is very elaborate infrastructure and damage in terms of the nerve agent that was used in the attack a lot of disruption in the village where the attack occurred and a visible and high profile thing that somebody did there and the question was whether that was done to send a message to other people who are not in line with where vladimir putin and the russians want to them to be we have to watch how all that unfolds. rex tillerson seeming to go a little further than the white house. the white house says this was an offensive act and something should not happen.

sarah sanders said this was an appalling thing but stopped and said this was the russians itself >> eamon javers at the white house. >> jim, a near to negative but something investors will get over pretty quickly. do you agree >> look, i am coming back to this chinese theme i have to. the president is doing everything he can to combat china. i am going to quote pompeo from january. he goes we can watch very focus effort to steal american information to infiltrate the united states with spies people are going to work on behalf of the chinese government against america. how many times can we see that what's going on here is a wholesale shift to block china whether it would be steel or aluminum or intellectual property theft this is all the piece pompeo is

often -- this is about china being intellectual and economic enemies as well as maybe tillerson not being a theme. can it work towards north korea solving, i don't know. china, you are our enemy i think anything short of that is a mistake >> really? don't forget pompeo has been a big critic of iran and nuclear deal as well, jim. it is both north korea and iran that you can certainly see in play here, obviously, potential talks coming between the president and kim jong-un and not too distant future iran is something that could at least concern people given that he's been hawkish in the past on that particular issue. >> well, i agree this guy is a cold war state department guy, cold war in iran and china and russia

tillerson stood for one thing, commerce secretary of the state department pompeo is about protecting intellectual property and recognizing who's our enemy verses who's our friends i got to tell you if you are china you are sitting there saying what is he doing? how much of a trade war, how much of opposition is he bringing to the table? do they want north korea to just go away and make it so that the chinese do trump's work? i don't know the quotes that i am seeing from pompeo are about intellectual theft this is more important than steel and aluminum >> are you worry as sorkin po t pointed out of the dwindling numbers of business after cohn and now rex. >> not if they perpendicular ari kudlow if they pick kudlow then i think you got good cop/bad cop kudlow stands for globalism.

i am not worried you got wilbur ross in there and secretary mnuchin. they got plenty of business guys i do think having tillerson in there stood for a bizarre form of business global that's not in zinc anymore of where the president is going >> yeah, listen, jim, right now first of all, china has the threat you are describing that's been there for a long period of time we know the operations they have to steel intellectual property i did a documentary on it six years ago in terms of covert efforts to steal intellectual properties certainly over a long period of time i don't know that i would necessary lump in last night's action on broadcom with that though it would seem to me that regardless of the administration that you may have seen that deal potentially blocked. if we knew what it seems to be that the intelligence agency may have or think they have.

we may never know that but that may be one of the reasons why that relationships between third party entity and foreign government that they cited but said the rest of it was classified in the extraordinary letter we got from treasury a week or so ago this may have been a deal that was not going to happen. the question i have now and others have is it is going to be some sort of retaliation from china. yesterday, you seem to become much more negative for qualcomm acquisition for nxp, i don't know why -- you did seem mor negative on it on your commentary here and people were focused on the needed regulatory approval in china. it is the last one they need to your point of a potential trade war or a back and forth, i think you got to focus on that would be highly unusual again from broadcom not to give the okay here? one could argue if it does not, it is a sign of something larger

than qualcomm acquisition of nxp that's a play. >> how many times can you polk the chinese in the eyes. how many times can you say the chinese are stealing intellectual property. when we just decide that we are not going to let the chinese buy unical i thought they're going to retaliate then i think they want to show muscle this is the deal that i am worried about. i do think that the chinese, their holdup is way too long other than your field of communications and 200 bucks worth of chip and a card this thing should have been appro

approved >> i am surprised it is down that much. i thought we told people this was likely going to be blocked i mean -- that letter that we got a week ago from treasury was extraordinary. laying out the case for why it was a national security concern. yet treasury comes out and says point-blank violated in three different instances, broadcom, what did people think was going to happen here did they not think that cfius was going to take action trust this as a key here and it would seem that broadcom violated that trust and qualcomm is down 5% after a few sessions as we did start to focus on the potential of it being blocked by the u.s. government. i am surprised as it is. they're still talking about seven bucks a share a couple of years from now if they get the nxp deal done and then you got to get your apple deal done. maybe we'll get this done with

we don't want to mess with anything here. >> maybe of the 5-g of the next generation qualcomm has been next generation qualcomm became national treasure out here. i got so many ceo telling me one thing which is what was hock tan thinking if it is a national issue, it does not lie within broadcom i don't get it david, this is just wholesale about stopping china from being involved in 5-g. i don't understand it. i do think that qualcomm being national treasures is a bit of a stress, don't you? >> how many companies, considering how much of their business could be considered a national security threat and whether or not weighs on their

merger plan. >> people are taking into consideration no doubt secretary mnuchin did make a point making it clear it was a qualcomm focused decision but to carl's point, it is not -- it is within reasons to have people assume that you are going to take a larger context on a lot of things that involve china even if it is not 5-g. we all know and we have been obsessed with this for a long time they are growing power around the rest of the world, of course, we borrow them from the u.s. market because of unclear ties it is founding so many other things and worrying what jim is talking about which is covert action on their part it is not that much of a surprise given it is right in this central zone of 5-g and this news set of standards that's going to dominate the world eventually when it comes to wireless. >> jim, you made the point that they did not retaliate we have a chart of foreign

investment out of china. there it is, u.s., china and switzerland and brazil these figures in the grand scheme of the economy is not huge, how much do you worry of that going away? >> applied materials of what i am seeing today has a gigantic presence in china. they have been loved by the chinese government sky work solutions, a lot of business obviously i guess what i am -- i am stunned on several issues. no one thinks that hock tan is going to stop. secondly, people must feel, david, tell me if i am wrong that the $700 is not going to happen for qualcomm or maybe because there is no deal with apple and this was always a concern with qualcomm. how safe is qualcomm if there is no deal with apple

>> um -- qualcomm is in a difficult position, they need to get it done. you know that. to the extent that you were going to have al vote to install new directors, it was not going to reflect well on qualcomm's management let's make no mistake on that. you know that. there was not a great deal of faith in that management team at least based on what i heard from shareholders and what they appear ready to do before cfius moved in here. broadcom was willing to argue they thought it was going to be. it was not a great reflection on shareholders' view management. maybe that's apart of it now, too. >> i think you are back into well, what is qualcomm really. david, when did broadcom become a stocking horse for china it seems very american and i look at hock tan, he's american. i look at the november meeting with the president, hock tan decides to get rid of the

domicile over seas how the heck did this come to be broadcom is an american company for haven's sake what is this about broadcom being chinese? i don't know >> it is not chinese, it is a single based company soon to be incorporated here in the u.s. as you well know and pointed out with a lot of u.s. connections already given at shareholders base there is certain things that's classified in terms of the cfius review i don't know what the intelligence agencies have been monitoring or who they have been monitoring or following or what they know or don't know or think they know. you have to believe that may figured in here. >> a little bit of color, guys >> well, david, if that's a case, would you want a state department head who has some ties to the cia? >> i guess, i don't kno know -- maybe.

when they're a u.s. company, when broadcom becomes a u.s. company, they should not be preventive from acquiring what they want. now, they'll never be able to acquire qualcomm let's be clear they can do other deals. >> president's making some comments to reporters before he gets on a plane to california. he disagreed with tillerson on iran a spokesperson for state says the secretary did not speak to the president and is unaware of the reason but he's grateful of the opportunity to serve and believe that public service ace noble calling. we wish secretary pompeo well. >> do we think that implies there is going to be a change in the iran deal. he has not changed it but he did not -- it is every six-month and it had to be ratified, i believe. we'll get some play back from the president. we'll stay on top of the big news out of washington this morning and that's tillerson out

as secretary of state. the president as we have been talking about blocking broadcom bit for qualcomm analyst calls on ge and amazon and t-mobile and all others. more "squawk on the street" from post 9 in a moment

at holiday inn express, we can't guarantee that you'll be able to contain yourself at our breakfast bar. morning, egg white omelet. sup lady bacon! fruit, there it is! but we can guarantee that you'll get the best price when you book with us. holiday inn express. be the readiest.

if you are just joining us this morning rex tillerson this morning is out. he'll be replaced by mike pompeo the latest white house's

departure after gary cohn and hope hicks and others. the president says he'll take a good look at larry kudlow. the president says that he believes that tillerson is much happier now. we look forward to see that tape play back in a few minutes let's discuss with jim how all of this a llters the landscape. the loss fees is something that we have not mentioned today. >> they obviously of a large fee potentially and don't forget of the financing fee for an enormous deal which they raised about $1 billion in commitments. as for tillerson, it seems clear from the statement that he had every intention he said that of

every intention of staying because of the process made of national security. he was dismissed by the president and it was not clear it was his intent to leave >> the president's personal assistant was escorted out of the white house on monday for an unspecified security issue that's coming out of the journal this morning michael bender, the reporter over there with very little color on that. we'll see what the president says on this it is a packed day for him, he goes to california to tour some prototypes of a border wall and he'll make comment to the marines before he makes his way to los angeles, i don't know if he has a fundraiser tonight but it is his first trip to california as president. >> jim, you are talking to a lot of the people who move our economy right now. back to broadcom and qualcomm and broadcom and intel for a moment, i love to get your thoughts

yesterday we were talking about the potential prospect for broadcom it was my understanding and i was not ready to report anything because i think it is unlikely intel would only move in broadcom did not succeed when you got -- every bank tide up in wall street and those would go away now. if enteintel did not have inter. again, unlikely they did not deny the journal story and their statement the other day but they did not encourage it in any way. >> well, i have brian on the show the ceo, i got him on later this week i think it is an interesting opportunity to be able to ask him. why would we come on if he's preparing that hock tan is really here. i mean honestly, this intelligence intellectual property theft, this was a a lot

in the sand. i think this really heart casar making bad laws. i struggle over the 5-g. the gem that must be protected of qualcomm. i struggle of the notion of the november meeting i struggle over the 5 million shares that's supposed to come today. mueller is doing an unbelievable job but wow, i am struggling here >> i have my criticism of their strategy throughout before they start toing antagonizing. >> antagonizing the government >> they did not win, they were close. although qualcomm pushed back

and say they're not going to get all the six directors but they did not get there, right >> perhaps, qualcomm did it a favor by letting anybody know prior to any change of control that cfius is going to object to this deal. >> by the way, guys, an early bell there some nigers from the crowd here from the big board we'll hear from the president. cpi did come in line up. let's get to the president, his remarks to reporters >> i work with mike pompeo for some time. tremendous energy and intellect. we are always on the same wavelengths. the relationship has been really good and that's what i need in a secretary of state i wish tillerson well. gina who i know very well and

who i work closely will be the first woman director of the cia. she's an outstanding person who also gotten to know very well. i gotten to know a lot of people very well over the last year and i am really at a point where i am getting close to have the cabinet and other things that i want but, i think mike pompeo will be a truly great secretary of state. i have total confidence in him and as far as rex tillerson is concerned, i very much appreciate his commitment and his service and i wish him well. he's a good man. >> mr. president, what did you tell rex tillerson >> rex and i have been talking about this for a long time we got along actually quite well but we disagreed on things when you look at the iran deal, i think it is terrible, i guess he figured it was okay i want to break it or do

something and he felt differently. we were not really thinking the same with mike pompeo we have similar thought process. i think it is going to go very well rex is a very good man i like rex a lot i really appreciate his commitment and service and i will be speaking to rex over a long period of time. >> mr. president -- >> i cannot hear you >> no, i really didn't discuss it with him honestly i made that decision by myself, rex was not as you know in this country. i made the north korea decisions with consultations with many people but i made that decision by myself. >> i actually got along well with rex but it was a different mind set and different thinking.

what say it again i respect his intellect and i respect the process that we have all gone through together. we have a good relationship for whatever reasons and chemistry for whatever it is, why do people get along i have gotten along well with mike pompeo and frankly i got along well with rex, too i wish him a lot of good things. i think he's going to be very happy and i think he's much happier now but i really appreciate his service with mike, we had a very good chemistry right from the beginning. well, it sounds to me and i am speaking to theresa may today. it sounds to me it would be russia based on all the evidence they have. i don't know if they come to a

conclusion but she's calling me today. as you know now we are going to the wall we are going out to the wall we are going to be looking at the prototypes which is important for our country. but, theresa may is going to be speaking to me today it sounds to me that they believe it was russia and i would certainly take that finding. >> mr. president, do you believe -- >> as soon as we get the facts straight we'll be speaking with the british today, we are speaking with theresa may today and as soon as we get the facts straight, if we agree with them, we'll condemn russia or whoever it will be i will speak to her some time today. we are very happy with the decisions by the house intelligence committee saying it was absolutely no collusion with respect to russia and it was a

powerful decision, strong decision i believe they've going to release hundreds of pages of proofs and evidence. we are very, very happy with that decision. it was a powerful decision that left no doubt. i want to thank the house intelligence committee and all of the people that voted i am looking at larry kudlow very strongly. i have known him for a long time we don't agree on everything but in this case i think that's good, i want to have different opinions we agree on most he now has come around to believing in tariffs as a negotiating point. i am re-negotiating trade deals and without tariffs, we would not do well. larry has been a friend of mine for a long time. he backed me early in the campaign, i think he was one of my original backers. he's a very, very talented man,

a good man i think larry kudlow has a good chance i am also speaking to many others but i think larry has a good chance. thank you all. i will see you -- i will see you at the wall. i will see you at the wall >> that's the president saying i will see you at the wall in fact, we will when we see him later today in california inspecting some prototypes for the wall i did not discuss it with him and i made that decision by myself, the north korea talks, i made that decision by myself i got along well with rex but it was a different mind set and different thinking >> yeah, in terms of decisions to dismiss tillerson, that was his decision he did indicatehe had some talks with north korea with his aids but not tillerson in making that decision. jim, you brought us yesterday

that kudlow is a front runner, certainly seems like the president said just that just now. hard to read it any other way. >> yeah, i mean you would not put it out there it would be stunning if he did not pick larry after they just said larry moved closer on china in terms of hard tariffs. there are people in the administration who are dreadful. they just don't like larry at all in the west wing, why? larry has said tariffs are the va vein of our existence. i think china its behind so many of these president's move. he gets the job. >> jim, listening to you this morning with your focus on china. i just wonder if we get a trade

war with china, that cannot be good for the market, business and different things you certainly seem to be -- i don't want to put words in your mouth. what i am hearing is that we are going get much tougher and the question is whether they'll respond. >> well, really the issue is 5-g with broadcom which of course the next generation of phones. if the issue is china, come on, disarm north korea, this is my goal and i think all is for given, that's an interesting narrative. i also think that there is people in the white house who generally believes that the chinese have -- a fifth column in our country dummy companies steeling our intellectual property anywhere they can this is a message to the chinese. that game is over. if you wanted to say -- american

companies are shaking right now. am i next? this is viewed as so out o of -- the cfius and the president so out of character but you know what we have to say, david, as you said hock tan was not going to stop and i think that you can say that hock tan may be let's put it this way, a bit of an out liar and the president does want to stop apple business there and intel business there i would like to think it is more north korea than trade war but david, come on, there is not been a -- as much as what, china, you are okay. rex tillerson, china was okay. >> although they did cut down carl on their stealing of intellectual property. that has sloped considerably for

some time a number of years ago. they were breaking everybody's firewa firewall obama had sort of pushed back on that to a certain extent the question that jim raised is the 301 section with the u.s. trade which is focused on intellectual property and what the findings will be and what the results will be in terms of our action with regards to china. >> guys, let's get to a couple of movers. >> 301 >> while we have the chance, intel, best performing dow component at the moment. ge is the worse. jp morgan, target to 11. there is a plausible case for 50 cents of free cash flow. >> i think it is the third price target cut this year >> yeah, oh my this piece basically says the

dollar that people think ge could earn is more like 50 cents. this is a piece where it says there is going to be endless restructuring and discussions of revenue recognitions i am not buying the shambles argument companies wor company worths 11. david, is this between -- is this a vendetta against the old ge or a recognition that the company does not have a handle on the last acquisition which was awesome and -- >> yeah, listen, i am sure they would both say this is not about whatever our hostility of previous management but simply a

fundamental review of their pros pec prospects as they see it, jim. what i would point our audience is something that i have reported on for a number of time that is board that's focused on the potential for breaking this company up in some fashion and i don't think it will be that long before we get communication along those lines. not necessarily with a great deal of details but we may get something. the question, jim, will become well, what is it worth if you figure out end game for health care or you know and an end game for some of the other communities as well that are doing fairly well aside from power. >> i am coming back to the idea that this stock is back at 15. it was inching up. these guys are plain serious

wackamo. i know more about ge than flannery does. it is a powerful piece david, there is a level of division here which says the great american does not have a cl clue of what it is doing >> i won't disagree with you there is a list in there and there is a list of frustrated shareholders who watch this cfius decline over the years, we are still hanging in there and they are not particularly happy either perhaps these analysts are reflecting their own level of hostility. >> while we are talking about this do you think there were share holders in qualcomm that were after the actual bid of the amount of money of $79 qualcomm is coming back and starting to le flereflect the fundamentals other than hock tan, did anybody

believer this believe that it is going to happen >> not too many. everyone taking out cfius, we would be sitting here now at that meeting taken place and they would have gotten at least four directors or six, it would have been a fascinating situation in terms of what would occur then or what would be negotiations that would follow there were shareholders who thought there was a possibility that broadcom would be victorious with a good number of its director nominees and that would lead to something that might result in a premium beyond >> many of them dropped off over the last week. although frankly it was asking a lot of investors to understand the cfius process. they did not seem to want to focus on as much as they should have >> how about this narrative? hock tan is maybe going to go after micron and micron is going

to earn itself sixth times earning after this run remember broadcom historically has done great acquisitions and micron is an american company and western digitalis up and i am -- this is the renaissance of the internet of things micron is way ahead of the chinese -- i don't know. hock tan wants to do a deal? why not buy micron >> we'll see i think he's got to take a little bit of time i think he's got to step aside when you get a presidential decree, did you read that thing? >> yeah. >> that was some seriously tough talk >> i read it last night. my phone lit up with people who are saying -- wait a minute, is this -- one guy called it fascium. i read the note and i am saying

are you kidding me are you saying that cfius is not important? it is called highlyunusual and self optimal for companies that may want to take over. >> i think you want to step aside a little bit and get yourself re-domiciled. >> micron has changed. it has become a data center play because of flash and micron's chips. i was reading to prep for my interview, the things that micron are making are things that intel wants intel wants to dominate the data center and there is only two ways the do it you can buy micron a little bit less intense you can buy nvidia and david, nvidia is so expensive -- i don't know anyone who can buy it >> all the gainers this morning,

my kr micron, intel and broadcom and qualcomm it is all -- except for michael kors, revenue estimates are too low and macy's and kohl's are in there. the attention paid to tech and the performance of the nasdaq today verses the dow, you are getting into interesting areas here, 10% verses 1 or 2. >> jimmy choo did help kors to switch direction -- >> yes, it is. >> i mean toe cleavage s or something. >> those are like thousand dollars shoes. let's go shopping! >> really? you and i going to wear jimmy

choos? >> let's buy it for our wives there. >> let's stick with cfius. >> you're lemon and he's curtis. how about that >> exactly >> nobody's perfect. dow is up 170 and we have reclaimed 2800 s&p let's get to bob pisani. >> 5-1 tillerson had a brief move effect on the s&p down but it was short lived. we are sitting at the highs today. se se semiconductors, we are seeing materials and banks are weaker because of the 10-yr that's been down this morning throughout most of the morning here, all 11 sectors are on the upside though if you look at the chip name, qualcomm and broadcom are moving around, we are at new highs and all the names we are talking about, these are new highs, xilinx and micron and lam

research and nvidia. they have been hitting new highs all year >> lam increase the dividend recently, they have been on a real tear. there is a simple reason why chip stocks are ruling it is a little bit of an mma activity here. it is driven by the internet of things it is not gaining smart phone growths. it is increasing the number of things that's connected to the internet championship is becoming a lead indicator for technology overall. we have been seeing upward revisions in earnings and it is becoming a bigger part of the market waiting in technology that's very important because there are efts for this. this is atacting more money. it is about $2 billion at market cap right now. its got intel and nvidia and broadcom and anything you want the big one that matter is the xlk. this is north of $20 billion of investment and it keeps ongoing up it is not just the chip stocks,

you got the fang names and apple and facebook, and microsoft, those three stocks, they are one-third of the wait ing in the xlk. throw in some of the big names and throw in the chip stocks, no high for that as well. i want to mention, earnings are over for the fourth quarter. what we cared about and have been watching, we talk about everyday is what's going on with first quarter numbers and revisions and the second and third quarters here is a good example why these earnings matter so much, the first quarter estimate has have been raised since the start of the quarter, 60% of the companies have seen their estimates raised they are up 6% of the year about one-third of the company have seen their estimates for this quarter, q 1 lower. they are down on the quarter the bottom line is threats of earnings growth are the biggest

problems the stock markets have. that's why this whole tariffs thing was an issue because it was a potential threat to earnings growth down the road. we could not quantify it and we did not know the market pulls back of the potential concern. double digit earnings growth every quarter as far as i can see. second, third, fourth quarter and potentially going into the first quarter of next year and that's what's keeping the markets up right now we are at the highest of the day, 188 >> let's get to the bond pit as well to rick santelli of some actions of what's happening after a busy day >> what an interesting day with regards to inflation, before we get to the charts, it was not though inflation disappeared, it just was not hot, hot, hot, that makes a huge difference. look at two days of 10s. real quickly there was a bases

point pop. did not last long, if you bli blinked, you missed it if you look at the 21st of february, we made a high yield colonies at 295. two days later on the 23rd, you began of 13th session. looks to be closing in the 2.80 range. from 2.81 to 2.89. this is important to pay attention to, especially considering that much of this happened after the jobs report that showed hot year-over-year average hourly earnings. now it's accelerated because the last report did not. if you look at tens minus twos on the yield curve, you see the lazy long end playing out there as well, as we are now hovering below 60 basis points. if you look overseas at what bunds are doing, you can see on this chart start incoing in mid-january, it has the same look of tens with more of a downward bias.

as a matter of fact, so much more of a downward bias that at its current level of 61 basis point, you're trading at the lowest levels since the 17th of january. finally, remember when the interest rates were a little more firm and things were hot with regard to the fed and the notion that inflation was indeed going to be more of an issue, that could barely get the dollar index on a closing basis to its midpoint of the year, around 90.5 now you see that it's drifting as well on this chart that starts on february 1st so we want to pay close attention. if the dollar index couldn't do well when we thought we'd have more fed, even more height in interest rates, i don't know if it can stand the opposite scenario carl, jim, david, back to you. >> rick, thank you very much when we come back this morning, a lot more on rex tillerson, who has been let go as secretary of state. ambassador nicolas burns will join us. also ahead, "stop trading" with jim.

weeds. nature's boomerang. at roundup®, we know they keep coming back. you never invited this stubborn little rascal to your patio. so, draw the line. one spray of roundup® max control 365 kills to the root and keeps weeds away for up to 12 months. because patios should be for cooking out and kicking back. draw the line with roundup®. trusted for over forty years. ♪ ♪

today, smart planning is helping the new new york rise higher than ever. as the world leader in unmanned aerial systems, we're attracting the world's best talent to central new york. and turning the airport into a first-class transportation hub. all while growing urban areas into vibrant places to live and work.

across new york state, we're building the new new york. to grow your business with us in new york state, visit esd.ny.gov.

rex and i have been talking about this for a long time we got along actually quite well, but we disagreed on things when you look at the iran deal, i think it's terrible. i guess he thought it was okay i wanted to either break it or do something, and he felt a little bit differently so we were not really thinking the same >> that's the president this morning talking about letting go of rex tillerson as secretary of state. multiple outlets now reporting that secretary tillerson learned of his dismissal pretty much as we all did that's when the president tweeted. jim, the unpredictability of this administration, some argue, has its advantages, especially when you're in negotiations with partners who you want to keep off balance, but the markets have had to adapt to this kind of corporate culture, so to speak, for the past year >> yeah, that's why i have twitter on tonight

twitter has become -- wow. tillerson lost his job on twitter. the mighty have fallen mr. tillerson is an important guy. listen, obviously on the wrong side of the iran deal. i also have applied materials. they're the biggest in china of any of the companies i deal with once again, the idea of what does china mean for companies, what does it mean for pompeo the president obviously focused on iran deal i'm not as focused on the iran deal because i'm deeply focused on the idea of china i think this is a new theme. we better get used to it >> jim, are you doing stop trading this morning what do you got? >> are you guys sitting down >> yes >> yeah. >> general motors compared to facebook and apple it could be a subscription model, according to morgan stanley. this is it i mean, like, okay, how about forget about cars entirely this is a business based on

subscriptions. what can i say they'll do anything to find a reason to buy gm anything >> all right, jim. we'll see you tonight. looks like you're having fun out there. jim cramer, "mad money." >> i'm getting tanned out here >> we'll see you tonight 6:00 p.m. eastern time when we come back, more reaction to the big story of the morning. that is rex tillerson being replaced as secretary of state markets hanging in there despite a decline on the dollar. vix actually lower we're back in a moment i think we should do that meeting tomorrow. well wait. what did you think about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good?

good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements, work experience... credit history. that more accurately assess a business' chances of success. this is a good investment. she's a good investment. get ready, because we're helping leading companies see it- and see it through-with digital. we're all under one roof now. congratulations. thank you. how many kids? my two. his three. along with two dogs and jake, our new parrot. that is quite the family. quite a lot of colleges to pay for though. a lot of colleges. you get any financial advice? yeah, but i'm pretty sure it's the same plan they sold me before. well your situation's totally changed now. right, right. how 'bout a plan that works for 5 kids, 2 dogs and jake over here? that would be great. that would be great. that okay with you, jake? get a portfolio that works for you now and as your needs change from td ameritrade investment management. he gets the best deal on the perfect hotel by using. tripadvisor!

that's because tripadvisor lets you start your trip on the right foot... by comparing prices from over 200 booking sites to find the right hotel for you at the lowest price. saving you up to 30%! you'll be bathing in savings! tripadvisor. check the latest reviews and lowest prices. of emerging markets obsolete? at pgim, we see alpa in the trends, driving specific sectors of out performance. where a rising middle class

powers a booming auto industry. a leap into the digital era draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential. good tuesday morning welcome back to "squawk on the street." i'm carl quintanilla busy morning today obviously rex tillerson the big news, out as secretary of state. replaced by cia director mike pompeo markets looking past a lot of this though. s&p did reclaim 2800 chips are leading along with some retail today. we're going to get to all of it. our road map begins with secretary tillerson out amid

clashes with the president, being replaced by pompeo we'll go live to washington for the latest >> and broadcom's bid for qualcomm is over president trump blocks the largest tech merger of all time. we're going to look into what happened >> plus, a look at how the markets are reacting to tillerson's departure. >> let's get straight to washington, d.c. the breaking news out of the district today that secretary of state rex tillerson is out happened about an hour or so ago. a little more than that. eamon javers watching that today outside the white house. >> reporter: good morning again, carl we just saw the president leaving the white house. he's on his way to california. the president said as he left he thinks rex tillerson will be much happier now that he's no longer secretary of state. that doesn't seem to square at all with what the secretary of state is putting out through a spokesperson here's the statement from rex tillerson's office, saying, the secretary did not speak to the president and is unaware of the reason, but he is grateful for the opportunity to serve and still believes strongly that

public service is a noble calling. nbc's andrea mitchell is reporting that rex tillerson found out that he was officially fired today through tweets when the president tweeted about it this morning, noting that he was removing tillerson and putting mike pompeo from cia over at state department as secretary of state. so that was a dramatic moment for rex tillerson to read this tweet saying, mike pompeo, director of the cia will become our new secretary of state he'll do a fantastic job thank you to rex tillerson for his service. that creates a series of moving chairs here in an administration where we've seen a lot of moving chairs just over the past couple weeks with the departure of gary cohn last week dominating he headlines. this week, it'll be the departure of rex tillerson dominating headlines the question here is how does this change the president's foreign policy approach. the president suggested he simply differed with rex tillerson on too many issues, never had that good personal

relationship with him, and emphasizing he doeshave a good personal rapport with mike pompeo, guys >> eamon, so many follow throughs on this there's the question of how it affects or will affect would be north korean talks, how it might affect the future approval of would-be cross-border deals, not to mention the ongoing concern about when you're dismissed like this, what kind of talent are you able to bring in if they might expect to be treated this way on their way out >> reporter: well, that's a fascinating one. you remember rex tillerson was viewed as a really high-level corporate success story, somebody from exxonmobil with a history of dealing at the very highest levels internationally he was viewed as somebody who would be a steady hand at the tiller here in terms of the state department then he got crosswise with the president, going back to last year when there was that report he had called the president a moron. then tillerson never quite denied it. the state department spokesperson denied he ever said that, but tillerson, when asked

about it, would always say, i'm not going to dignify that question with a response, never saying, no, i never called him a moron. so that kind of was hanging out there and soured the relationship between the two men. the question going forward is, you know, what kind of talent can the trump administration now in year two bring in from the outside, and i think the larry kudlow hire, if that were to happen, would be a measure of that, bringing somebody in from outside the administration, not just promoting from within there are so many positions open, including communications director, state department slot, which is now filled from the inside, that it raises the question of where the trump administration is going to get its sort of next level of talent from and whether, as you say, people from the outside will view this as the type of place they want to come work in or if they say, you know what, that's simply too chaotic for me. >> we will find out, eamon thank you for that stay with us john harwood is with us from pennsylvania john, there's two other things happening. one is the president's trip to california, and the other of

course is pa-18. before we get to that, let's get to what the president said about tillerson's exit earlier as he left the white house >> rex and i have been talking about this for a long time we got along actually quite well, but we disagreed on things when you look at the iran deal, i think it's terrible. i guess he felt it was okay. i wanted to either break it or do something, and he felt a little bit differently so we were not really thinking the same >> john, your thoughts on this in light of the other events going on today >> reporter: i think there's no other way to look at it than that this administration is in a very shaky condition at the moment the president lost his top economic adviser last week over trade policy that gary cohn disagreed with that fellow republicans disagreed with now he has fired rex tillerson, not only over the disagreement over the iran deal but also over

the talks, the high-stakes, high-risk talks with the north korean leader over nuclear weapons. it's also the case that the president has not criticized russia for the attack on a former soviet -- or russian spy in britain theresa pla theresa may, our ally, has rex tillerson condemned that he said he does not know the reason for his firing. this is a very, very shaky moment for the administration, and it comes at a time when they have some protection from republicans on capitol hill, but this race that i'm covering here is an illustration that that protection may not last all that long because you've got the democrat in a strongly republican district who is now in position to win we'll see what happens the president won this district by 20 points late polls have shown the democrat leading here. if he, in fact, wins this race, that is going to send shock

waves through the republican caucus, maybe cause some republicans to retire, and if you have democrats taking over the congress, everything is going to change for this administration >> you know, eamon, if you piece together cohn's departure, piece together rex tillerson's ousting, you might think that the president -- i'm sorry, eamon has gone john, i'll direct this question to you you might think the president is getting rid of the people he disagrees with within the white house. yet, when he spoke about the possibility of appointing larry kudlow, he said, you know what, we disagree on some important issue, except in this context, i think it would be good it's interesting he makes the case he's open to disagreement, except for tillerson, that was the reason why he got rid of him. >> reporter: look, disagreement is part of it, but it's more than disagreement. his closest long-time personal aide, hope hicks, has also quit. his personal assistant was fired

and escorted out of the white house within the last 24 hours so you've got a whole lot of turnover in key positions. his staff secretary, rob porter, was fired over the revelation of domestic abuse allegations that the white house had kept quiet so you've got a whole lot of problems in this administration that are poised, if in fact this political development we're watching here today in pennsylvania goes against the pennsylvania, his problems are going to get more difficult over time >> john, thanks a lot for that john harwood in pennsylvania let's stay with this story stocks remain firmly higher in today's session here at post nine mike santoli and art cashin join us to decipher what's going on in the markets art, i want to get your initial take we have a push/pull going on

larry kudlow seems higher up on the list and we have rex tillerson out. >> you saw the response yesterday. the market was selling off when jim cramer said that larry might be the person on top of the list, it's not that they rallied so much, but certainly the selling stopped and we pared some of the losses so i think the market feels somewhat comfortable with that equally important, the numbers this morning were very good. that has helped build things in here we pulled back off the highs somewhat reminiscent of yesterday, but not as precipitously. i think they're going to move along. i think they see, with all due respect, what's going on in washington is kind of an ongoing soap opera there will be developments that we'll watch and see where they go you know, the president said he's putting together a new team for trade talks.

so it might work there cramer believes that pompeo may, in fact, be very helpful on the intellectual property area the market is intrigued but satisfied so far >> the president did talk to reporters this morning in addition to discussing tillerson, he did shine a little bit of light on his thoughts right now regarding that nec director position and larry kudlow take a listen. >> larry has been a friend of mine for a long time he backed me very early in the campaign i think the earliest i think he was one of my original backers he's a very, very talented man, a good man and i think larry kudlow has a good chance. >> reports today indicate larry has spoken to the president twice in recent days talks to mnuchin, talked to kushner. the thinking is that perhaps that favorable chemistry offsets whatever disagreements they may

have on individual policy. >> it doesn't seem like the market is trying to infer very specific policy stances out of the potential for larry kudlow being the choice, but much more about, you know, kind of a comfortable wall street voice at the table, if nothing else i also think this market has become disengaged from policy sensitivity. i don't think -- the bull case right now is the five things that are coming out of the white house or from congress it is can we get back up to the highs because the earnings picture is still good, inflation seems under control. bond yields aren't getting in the way. i think that's the conversation right now. >> except for those who are in qualcomm, hoping for a deal. >> that's true and i don't know exactly how to sort that out in terms of what we're supposed to extrapolate from the general stance on deals, on exactly what kind of a free hand the administration feels like it has in terms of getting in the way of commerce >> you don't think the tariff conversation dictated how wall street traded in that larry kudlow, who is anti-tariff across the board, is a

comforting voice for investors to know he's going to be at the white house saying, you know what, i disagree with you? >> i do agree with you it was a test. it poked the market in a vulnerable time. people said, whoa, if this is going to go to the extreme, we're not going to be happy about it i think it was mostly a test the position got moderated gary cohn is no longer there whatever voice of moderation was in there didn't necessarily have the effect i think it matters, but it's been back burnered again this is one of these things where we're 8% or 9%, 10% off the lows and now the question is what's the upside risk i think that's now the conversation >> can i ask you, art, about the relative outperformance of tech and chips in particular over the past few days, actually year to date now the overwhelming influence of amazon and apple not since the beginning of this year but since the beginning of last year now it's a quarter of the market cap. >> no question about it. they think that those six or eight stocks are part of the

wave of the future as we talked about earl yerier,i think cramer mentioned it, that some of the new play is in the internet of things it's not just your iphone and whatnot, it's how things are linked together. also, don't underestimate the nfib number this morning i mean, that enthusiasm in small businesses is rocketing up that's just where the president wants everything to be deregulatory, less taxes the average small businessman part of my root is thrilled and i'm happy for that >> second highest in history for the first time since '06, taxes got the fewest number of votes on concern, although, the last time the number in '83, real gdp was 8-plus. >> there's a chance it boils

over a lot of it is rooting for my team my team is in charge it's winning i'm happy about it it's overwhelmingly five employee and under companies literal mom and pops, much more than half. it's not so much the small caps like we talk about, the russell 2000 this is main street, we think we have a good shot now >> mike, art, thank you. >> my pleasure well, president trump did block the largest tech deal of all time, if it were to have actually occurred. we're talking about broadcom's bid for qualcomm, which has effectively ended after the president said, no, you cannot do this, after getting a recommendation from the committee of foreign investment that said the national security concerns to the united states from this prospective deal rise to a level we simply cannot allow it to occur. this became a key part of what had been a raging takeover battle for months. we were getting very close to

the annual meeting of qualcomm, at which broadcom was trying to get directors appointed. they did win perhaps as many as six. it was back on january 29th that qualcomm actually filed with cfius for a review that's something that people close to broadcom have criticized, saying in many ways it disenfranchised their own shareholder base by inviting a review that didn't necessary need to happen qualcomm said they were trying to understand the risks of the deal at the time, understand what we should be asking for which it came to potential negotiating. the only way to find out if cfius has a problem with your deal is to file with cfius they did and we learned they did have a problem. regardless of whether they filed or not, cfius probably would have had a problem with this deal it was extraordinary in many ways certainly cfius deciding to

weigh in on a deal that hadn't yet come to fruition and might never have is one area that many people say is unexpected, if not unprecedented. and we also don't see these things get to the president's desk too often cfius typically will tell the companies involved, we don't like your deal, we don't think you should pursue it, don't pursue it, and they stand down in this case, either because cfius went to the president directly or because, and i don't know the answer here, broadcom's management team decided to take it to the president. only the fifth time we've got an ruling from the president that says you can't do this in the order issued last night, which is worth a read if you have any interest in this, they say the proposed takeover on qualcomm by the purchaser is prohibited, and also go on to say any substantially equivalent merger, acquisition, or takeover, whether affected directly or indirectly, is also prohibited that would seem to imply that if broadcom would acquire another

company or be acquired, and they quired qualcomm, that might not be allowed it will have a perpetual effect, this order when broadcom redomiciles, this is not going to matter they don't suddenly have a chance now to re-engage here they will never be able to buy qualcomm, according to this order. it does have a potential effect. history of blocked deals, we don't typically get presidential decrees. it's not great on the pr front to have your deal blocked by the president on national security concerns so broadcom will be dealing with that you can see trump already had blocked one. obama did one. then 1990, the last time this is only the fifth time that's occurred, even though we have seen a number of deals die at the hands of cfius. questions now of course for broadcom, after it redomiciles, what it will be able to do, what deals it may pursue or not qualcomm now focused on trying to get a settlement with apple, which continues to rage, of

course not paying their suppliers and complete their own deal with nxp, which awaits chinese regulatory approval. >> but qualcomm, for its part, the way it's trading, it's trading as if it can never be acquired so you have to be satisfied as an investor in the qualcomm that exists today plus nxpi in order to be in that stock. that's -- >> yeah, you know, this question of whether it's now been deemed a national champion, which is something we discussed when we got the first letter from treasury, which again was very much unprecedented, is certainly a key question is there no one who can acquire qualcomm because its technology is seen as so important to the future of wireless in this country and around the world i don't know the answer. but certainly not a foreign company. >> and what happens with intel for broadcom >> it is unlikely, but i don't think you can rule it out. the idea of intel making a move on broadcom while it was making

a move on qualcomm, just given the financing and how many banks were brought in, they all go away now if you're intel and want to raise the financing, it's easier to do, to mount a bid for broadcom we'll see if we get to that chapter. >> stocks, by the way, a new high today >> intel and broadcom leading the kmarch when we come back, secretary tillerson exits the white house. we'll talk about the market reaction dow up 167 s&p just a couple points shy of 2800 back after this. we're voya! we stay with you to and through retirement. i get that voya is with me through retirement, i'm just surprised it means in my kitchen. so, that means no breakfast? voya. helping you to and through retirement. it can power your apps with public services without starting from scratch. it brings your business up to speed,

doing more with systems you have in place. it can bring all your apps to life and run them within your data center. it is... the new ibm cloud private. the cloud that's designed for your data. ai ready. secure to the core. the ibm cloud is the cloud for smarter business.

business round table unveiling its ceo economic outlook. morning, kayla >> morning, carl the results are bullish this quarter. ceo confidence spiked in q-1 to a 15-year high that's according to this quarterly survey that the brt conducts 137 chief executives completed it during the month of february with companies having the tail winds of tax reform before the potential head winds of tariffs. of course, before the departures of gary cohn and rex tillerson that we've seen over the last week after measured increases over the last four quarters, respondents were noticeably more optimistic in their companies' sales, capital investments, and employment over the next six

months they expect 2.8% gdp over the next six months. that's up from 2.5%. jamie dimon, who chairs the influential interest group said in part, quote, these results validate brt'sed a vo can i can of smart and inclusive economic policies carl, back to you. >> all right, kayla. i'll take it thank you. back to the story of the day, rex tillerson out as secretary of state he'll be replaced by current cia director mike pompeo for more, we're joined by fred kempe, the ceo of the atlantic council. great to have you with us. you've got very interesting thoughts in terms of how this relates to tariffs explain to us what you mean. >> well, what you're seeing is the crumbling of the internationalist wing in the white house. you had gary cohn's departure.

but one of the most important partnerships around the president has been that of secretary of defense mattis and secretary of state tillerson they're globalists they're internationalists. i would think mike pompeo coming in would be a little bit less on that wing. and during these last tariffs, they were an important voice, particularly when it came to the importance of canada, our ally, and some of the security concerns that would go along with some of the tariffs so i think that's an important move it's also interesting we now have 45% turnover in white house. we've had five cabinet-level officials either losing their jobs or moving on. this is unprecedented. in any company, this creates a little bit of instability. the president says he's close to having the cabinet he wants. it's going to be interesting to see how quickly this changes because you have talks coming with north korea you have a summit coming up with nato how quickly can the changes be made for a new secretary of

state and get all the pieces in place. >> of course, when the president says he's close to having the cabinet he wants, the parlor game begins. who is next to walk out that door do you have thoughts there, fred >> well, you know, i think a lot of people are watching general mcmaster he's a really competent, very smart international strategist he also might be up for a fourth star, might be up for another military assignment. it's also interesting to see if this the last step at the cia. the deputy has taken over. will she stay there, or will senator tom cotton over time be shifted into that position we can watch that as well. the one person the president seems to have said nothing about in public in an unfriendly way has been secretary mattis. i think he's rock solid. certainly our allies hope he is

rock solid i think most of the world is watching that position more than any other position >> fred, isi's got a note out this morning they say markets do not like instability from washington, but generally have waved it off in the first year they say that might come to an end soon do you think that's true >> there's a theory in investing that i think goes back to 1920s of an economist named knight it's the difference between risk and uncertainty. the markets like risk, if they can calculate it what they don't like is uncertainty that they can't calculate and build in you may know better than i do when that crosses. you started thinking that was going to be the case on tariffs, but then things bounced back in a pretty big hurry, and i think that the deregulation that one gets, the tax reform that one gets, i think a lot of the good makes one live with a very

unusual way of running the presidency, which i think is going to continue. he was voted in as an insurgent. that's why his voters wanted him. they want him to turn over the tables, and i think he's going to do it even more now with gary cohn out and with tillerson out. >> speaking of risk, the president mentioned the iran deal as being a point of contention between he and secretary tillerson. should we expect that deal will be revisited conceivably, and one would wonder whether that will create some uncertainty out there. >> yeah, there are several cases where tillerson quarreled a little bit with the president on that he was also together with mattis on the iran deal the president ultimately got what he wanted, which was, you know, disavowing himself from the iran deal, not completely, but passing on to congress and

allies but that did get under the president's skin he is -- he feels more on the same page on iran with pompeo. russia is interesting. pompeo has been more on the same side of tillerson on russia, while the president has been in a bit of a different position. it's going to be very interesting to see what comes out of the president's phone call today or his video call with theresa may and whether he's willing to say this latest poisoning is somehow russia related. very unusual the way the president also did the parting of ways with tillerson apparently without a phone call, tillerson saying he doesn't really know the reasons. that's normal in the sense that when a president loses confidence in a cabinet member, the cabinet member leaves. it just seems to happen a little bit more often in this presidency >> all right, fred great to get your thoughts taught we appreciate it fred kempe now to our etf spotlight, where dom chu issi looking at cp stocks >> melissa, smh is the ticker

symbol for that semiconductor etf. if you haven't noticed, yes, it's currently working on an eight-day winning streak just like the nasdaq composite overall. that bullish action in the chip stocks has been a big story in the leadership coming from the technology second to be overall. the semiconductor fund hit another record high today. despite the fact one of its biggest holdings, qualcomm, is down on the day, broadcom is now of course deceased in terms of its deal to buy qualcomm it's made for an intense story, but it hasn't helped other chip stocks in terms of holding them back of the 25 members of the etf, all but two have posted returns so far, positive ones, this year to date. qualcomm and cadence are the only two that have not the two of the biggest drivers of that 17% year to date gain for the fund are nvidia and micron they're the third and fourth biggest weightings in the fund as of yesterday. they have a a 5% to 6% rating. the only two stocks bigger influences are intel and taiwan

semiconductor. there's some degree of caution about the recent performance of the chip stocks overall. that fund trades close to 10% above its average price over the last 50 days that level now qualifies as statistically rare, given its historic price action. so carl, as we watch the semi stocks, important to see how that momentum can sustain itself or be due for a pullback. >> nvidia has been doubted before new all-time high. dom, thanks. when we come back, the shake-ups continuing at the white house. former indiana governor mitch daniels will join us to talk about rex tillerson's itex dow up 144 "squawk on the street" is back after the break.

good morning, everyone i'm sue herrera. here's your cnbc news update at this hour. as we have been reporting, rex tillerson is out as secretary of

state. replaced by cia director mike pompeo, who in turn will be replaced by gina haspel. president trump says he made the decision to oust tillerson by himself and that tillerson will be much happier now. defense secretary jim mattis is making an unannounced visit to afghanistan a bit earlier en route to the country, he said he believes victory in afghanistan is still possible but not necessarily on the battlefield. >> it's all working to achieve a reconciliation, a political reconciliation not a military victory the victory will be a political reconciliation here at home, new england is bracing for the third nor'easter to hit the he's in less than two weeks. heavy snow and gusty winds hitting rhode island, and nearly 1500 flights have been canceled so far amtrak also suspending service from new york to boston.

and that is the news update this hour. carl, i will send it back downtown to you. >> sue, thank you very much. sue herrera. welcome back to "squawk on the street." obviously a busy morning as we watch developments out of washington, d.c. rex tillerson out at state markets largely unbothered by that vix continues to trend slightly lower. chips and retail leading the charge today as we said, another white house departure with the president firing tillerson in favor of cia director mike pompeo it comes just a week after national economic council director gary cohn designed over disagreements over tariffs for more, we're joined by mitch daniels, former governor of indiana. good to have you back. good morning >> hi, carl. >> i got so much to watch in washington these seemingly rapid policy shifts regarding tariffs, and yet stocks seem largely unbothered are you? >> well, i'm a little troubled by some of the policies, but i

guess the new normal is these constant -- it's constant turmoil. maybe that's why the markets are shrugging it off. >> how effective is it, a president or a leader of any organization who essentially appears to be arguing perhaps need a cabinet less than some of my pred seecessors >> i'm reminded that the movie mogul said i hate yes men, i want people to tell me exactly what they think, even if it will cost them their jobs that seems to be the rule in this white house i don't understand it. i served in two administrations, wrapped around my days in business, and i don't really know how a white house functions effectively with this kind of turnover, this kind of discouragement of contrary

thinking >> governor, when you look at what the white house has accomplished, you say maybe this whole thing is working though. the president was able to install a supreme court justice. he was able to accomplish tax reform there's major push on deregulation that the markets definitely like. these are three major accomplishments by this white house that in spite of what everybody is saying about dysfunction, the counter to that would be look at what they have accomplished where do you stand on whether o not this technique may be uncharted but may be effective >> i don't know if it's the technique. i would certainly agree these are important improvements i think the shift of regulatory emphasis, you can definitely give the administration credit for that they've put some real actions behind their stated intentions the other two you mentioned are achievements, but they're certainly shared achievements with the congress, without whom you wouldn't have either the new justice or the tax bill.

so i don't mean to be too critical i will just say that it's generally advisable, i think, to have both diversity of opinion and also some order in the house both for goodresults and the long-term confidence of the country. >> governor, with all the he headlines coming out, sometimes we forget about things from last week, namely the tariffs placed on steel and aluminum. as a former governor of a state that has a lot of industrial businesses, i'm just curious to get your take overall on whether you think they were a good idea. >> well, i can't find an economist at purdue or anywhere else who thinks that this is a well-advised action. it is interesting to look at it from the standpoint of my home state. indiana is the number one steel state in the country, has been for four decades very proud of that it's important but there are many, many more

jobs involved, and therefore at risk we're the number two auto state, number one rv state, number one state in terms of manufacturing intensity. percentage of our whole economy that's involved in manufacturing. so even in indiana, number one steel state, there is some real risk that the net of this could be negative, both in terms of simple job count and of course cost to consumers. >> a lot was written over the weekend about farmers, grain farmers in particular, who worry about the loss of a marginal buyer overseas how serious is that concern? >> pretty serious, certainly, in our state of indiana and elsewhere. agricultural sector needs those exports. prices have not been positive for a while. and it's very, very easy -- by the way, it's perfectly fair for

the president and others and his supporters to point out that other nations don't have clean hands on this. one of the most protectionist things they do, of course, is shore up unproductive agricultural sectors one of the quickest triggers they might pull would hurt our farmers. let's hope that's not the case >> finally, governor, what a provocative piece in "the washington post" aimed at condoleezza rice and her efforts to reform the ncaa you say best of luck if you thought iranian sanctions and north korean nukes were hard problems, wait until you try this one what's your message here >> well, i'm so glad the ncaa picked somebody as stellar as condi rice to lead this commission you know, college athletics, and basketball maybe in particular, has some issues which were pretty obvious even before the fbi took the lid off another corner of it

so as someone who's a passionate sports and collegiate sports fan, i do hope that we'll see some new rules and policies from the ncaa, and by the way the nba could help in a big way, that brings fairness and greater integrity to the game and restores us to a place where these are really students that we're watching and admiring and cheering for >> the year of readiness is a very interesting idea, governor. have you heard have condi? >> no, we're going to talk, i guess, sometime soon when we do, i'm going to say, as i did in that piece, look, i don't pretend to have the answers. i rattled off year of readiness, meaning do what we once did and be a student for a year before you play varsity sports. but whether that's part of the answer, it'll probably take a multiplicity of approaches to clean this thing up, and i do

not know exactly what the right ones are, but where we are is not a good place i really don't understand anyone who defends the status quo with its excesses and its unfairness to the athletes who create all this income and money and possibly its dishonesty. >> yeah, well, we're in the middle of march madness. who knows. very few executives have the crossover knowledge between sports and business as rice. we'll see what she does. governor, please come back soon. good to talk to you. >> likewise. thankyou >> governor mitch daniels. when we come back a lot more on broadcom's blocked bid for qualcomm why our next guest says qualcomm is too important and too big to merge. dow off the highs of the session, up 87 we're back in just a moment.

one top technician is out with a new call on the next

sector to break out to new highs. we'll reveal what it is on tradingnation.cnbc.com more "squawk on the street" coming up.

president trump blocking the biggest ever proposed technology takeover, citing national security concerns, and saying broadcom cannot take over qualcomm it's a sign of heightened economic competition between our country and china. joining us now, aei resident psychological l scholar. he testified in congress on cfius, the compilation of different agencies that made the ruling to the president back in january. nice to have you give me your take on what was a somewhat extraordinary move, it would seem, by the committee for foreign investment in the u.s. >> well, there are two sides to this one is that it was a necessary move, the correct move this was not a company that -- qualcomm is not a company the

u.s. could afford to lose technologically. we are in a technological competition with the chinese so on the national security side, this was the right move. the economic side, which we're all aware of, is it would be better if we weren't so reliant on one company without prejudice to qualcomm, we need three or four qualcomms in this space. the companies become too important to u.s. national security it's a version of too big to fail it's too big to be acquired. >> yeah, i mean, this has been a debate since we first learned about cfius' potential problems with the deal, the idea that they're kraecreating a national champion you seem to be indicating they are. >> i think the national champion was created years ago. i'm not blaming cfius for this i think in the situation we're in now, it is the correct call that qualcomm has become a national champion and cannot be acquired, except maybe by a very narrow set of firms. the u.s. government is willing

to deal with so i think we've unfortunately got to the point where we have national champions that's not ideal we need more competition in this space, more competition for qualcomm but right now it is a national champion, and we have to treat it as such >> yeah, the main competition. what about broadcom, a company that's going to redomicile here in the united states it's a singapore based company it's redomiciling in part because cfius told it, it had to do so in order to complete its deal april 3rd they become a u.s. company. is their future clouded as a result of this ruling? >> well, i think they'd be best off just stepping away from the qualcomm acquisition, wiping the slate clean, and moving on i think there are other acquisitions we know that they can make i don't think the door is entirely closed. i think their behavior with regard to qualcomm has left a bad taste in regular todtors' ms

>> what about protectionism overall? should we read anything into that, and/or this heightened competition we have with china >> i don't think of this as a protectionist move as i said, i don't think the trump administration created qualcomm as a national champion. i think it's gone on for years, this process that's led to this point. however, i do think we're getting tipped off here. if broadcom, which is a singapore company that's trying to redomicile to the u.s., can't buy a u.s. tech company, there is no way a chinese firm is going to be allowed to buy u.s. technology there's an investigation by the trump administration called section 301. it's going to include investment restrictions on chinese firms. i think this ruling is a tip-off that those investment restrictions on china are going to be very tight >> yeah, i mean, and we don't know what obviously is classified many of us wonder what it is that perhaps the intelligence agencies do know about broadcom's relationships, if anything, that led them to this.

because to your point, it's a singapore based company. it wouldn't appear to necessarily have relationships that are any different than any other companies with china >> well, this is getting a little wonky, but we're going to get either a bill in congress that changes the review process, or from the administration itself we're going to get an expansion of u.s. regulatory powers to see about transactions overseas. transactions that are legal right now but the u.s. may decide we don't want them to be legal going forward. it's obviously very awkward for the administration if broadcom has been engaged in that kind of transaction. even though it's legal now, and then three weeks from now the administration says those are national security risks. so i don't think we necessarily have anything really untoward by broadcom i think we have a change in u.s. policy coming up, and that change would make broadcom's ownership of qualcomm pretty questionable on the administration's own national security grounds >> interesting all right. well, mr. scissors, thank you for being with us.

we appreciate it >> thank you now let's send it over to john fort with a look at what's coming up on squa"squawk alley. >> set your smart watching, if you're wearing one james park is going to join us not only do they have a couple new prungts, he's got the best insights into the state of the smart watch rkmaet that is coming up on "squawk alley. feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone.

now you can get it, too. welcome to the party.

the bill is needed because the small banks just can't deal with all the restrictions placed upon them, all the burden and the costs. so we're losing a lot of our community banks. i think we all ought to be

concerned. i see things her way, with respect to don't like taxpayer bailouts do you think this bill will invite more of those in the future considering the threshold, for example, raised to 250 billion in terms of the banks that are most highly regulated. >> i think that the bill as it's written right now will not cause major problems

primarily dealing with processing transactions are asking that their requirements for capital be reduced while i understand it and am sympathetic to their concerns, we really can't start down that road we really need to have a leverage ratio that is where it is today and not reduce it for anything that leverage ratio is supposed to be the minimum capital for the best banks in the world. and so i think that's a number we really shouldn't change >> excellent well, bill, i'm glad to hear your opinions. i know that in general, regulatory teardown has been a very positive thing for the economy thus far we hope this bill will continue that with respect to the economy. thank you for your time. carl, back to you. >> all right rick, thank you very much. rick santelli. when we come back, a lot more on the news of the morning. that is broadcom's failed bid for qualcomm, tillerson out at the white house. dow up 92.

"squawk alley" starts in just a few minutes. today, the new new york is ready for take-off. we're invested in creating the world's first state-of-the-art drone testing facility in central new york and the mohawk valley, which marks the start of our nation's first

50-mile unmanned flight corridor. and allows us to attract the world's top drone talent. all across new york state, we're building the new new york. to grow your business with us in new york state, visit esd.ny.gov.

to grow your business with us in new york state, sometimes, they just drop in. obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪

good morning, it's 8:00 a.m. at qualcomm headquarters in sand yag and iego and 11:00 on wall street. welcome. ♪ turn and face the strange, changes ♪ ♪ gonna have to be a different man, time may change me ♪ ♪ but i can't waste time >> good news