accenture. let there be change. welcome to "power lunch," everybody. alongside kelly evans i'm tyler mathisen. coming up today stocks higher, building slightly on the recent rally but we'll talk to one of the biggest bears on the street about whether this rally is for real. plus u.s. students not making the grade. a.c.t. college entrance exam scores, 30-year low now. so how can the education system recover from the covid lockdown to create the future workers american businesses will need? kelly. >> before that let's get a check on the markets, which have turned lower this afternoon. the dow giving up a more than 100-point gain. we're talking about almost single-digit declines for all the major averages and they're coming off a huge week, pretty much best week of the year up 6%

for the major averages, up 8% for the russell small caps. utilities among the leaders today. constellation energy beating on earnings and revenue. it's up 6%. dominion nrg also rising upgraded at barclays. but solar energy getting crushed again. solar edge downgraded by wells fargo. their price target going to 82 from 190. solar edge down 75% this year including today's 8 1/2% drop to below 70. and shashz of bumble are lower after ceo and founder whitney wolff hurd announced she will step down as ceo. that's knocking bumble down almost 6%. turning to the markets might be coming off a hot stretch last week but joining us now is one of the bigger bears on wall street with a year-end target of 3800 on the s&p and he stuck with it all year including midsummer when others capitulated. he's not bearish on everything, though, still finding opportunity. and what does friday's jobs report say about his hope acronym? here in stew studio is michael cantrowitz chief investment

strategist with piper sandler. it's good to have you here. >> thank you. >> we missed the -- the covid setup. it was a good one. >> one of the nicest home sets of any. you get an a. >> indeed. but we're glad you made the trip here today. let me ask you but the stock market. what a roller coaster ride it's been. you know, for part of the year we literally saw people raising their price target to like 5,000 as we moved through the summer months. boom, at that very moment we started to see stocks weaken again. can you just take us on a retrospective of how you think we got here? >> sure. in the beginning of the year our view was that we'd have a much worse second half than a first half because we thought we would see what we're starting to see now, weaker employment take the fed off our back. so the beginning of the year what we saw was the banking crisis created a lot of liquidity, a lot of exuberance around ai. it happened at the same time. and that's where we really saw this market bief kate, the magnificent seven were born effectively.

if you've been watching the s&p 500 you've seen a headline index that's done quite well this year, highs almost 20% in july. but if you're an active stock picker or if you're not necessarily buying large caps it's been a very different tape. so we've had this bifurcated market all year, and i think we have not seen a recovery trade persist for more than two m months. that's small caps, deep value, autos, retail, banks. because we don't have the conditions for a broad macro recovery right now. i think what we're going to continue to see is back and forth between soft and hard landing, euphoria or fear and much of the tape remained very bifurcated as the macro background. >> so until last week's jobs report you'd have to say, wouldn't you, that employment has held up remarkably well. it's been pretty good. i mean, the month prior was a knockout number.

now it was downgraded. they took back some of those jobs. but until this latest report employment's been pretty good. >> it has been if you're just looking at again one of the headline non-farm payrolls number and that was the eighth in the last nine months we saw negative revision. what i look for in our process is not try to lean too much in one data point like non-farm payrolls or employment claims but instead really look for a broad set of data that have historically given you warning signs to perhaps what we saw last friday -- >> are you seeing those warning signs now? >> we've seen them all year. >> what are they? >> it's fewer hours worked in the manufacturing sector. that's been declining all year. fewer temp employment. that's been declining for about nine, ten months consecutively. fewer small businesses, nfid data, saying we're hiring. that's been declining. consumers saying that jobs are plentiful. that's been declining. i could literally sit here and

name 20 different data points that have historically given you a warning sign. it's not telling you when a recession's going to hit necessarily but it's helping you understand whether or not we're really in the midst of these lags of policy and i think last week's payrolls report, adp report, the continuation of rising continued unemployment claims all fit with these other warning signs we've been seeing all year and they're likely to get worse, not better if we believe we still have much of the digestion of a lag of policy. >> you're probably as familiar with the argue bmts why we could have a soft landing or no landing. goldman has been bullish all along. they always had very low recession odds for this year. i think they're still pretty low for next year. they say maybe the labor market can keep going long enough to kind of get us through this rough patch. do you think hard landing? is that -- not only that a downturn is coming but potentially a severe one? >> it's hard to know magnitude. because i deal in a very quantitative perspective and you

can't model what becomes a non-linear event. like when lehman went bankrupt or when the tech bubble popped. we didn't know the magnitude of the downturn. that has to do with how much tightening occurred, what the secular backdrop is, too many variables to really plug in and have high confidence more importantly of the depth of the magnitude. what we can figure out is are we heading toward recessionary data or are we heading away from it? and i argue for much of this year despite a lot of the headline data looking good and being very shot'll we've headed toward it -- >> forgive me for interrupting. the year-end target was 3800, 3850, something like that. and you've stuck with it, to your credit. >> to be fair we had a lower number to start the year and i readjusted it higher in july not because my outlook had changed but because the market, the index, the seven stocks that carried the market had gone up so much. i saw a stat today that the seven -- maybe it's the top ten stocks account for 134% of the market's gain because the

average stock, the equal weight s&p is down this year. >> it's worth noting we've had some in the investment business who are permabears. but in 2021 if i'm not mistaken you're one of the highest price targets on the street. in defense of your framework you've been all over the place. >> but what i want to get to is do you still really believe that 3800 is a year-end target or do you think 3800 is something that may happen into the springor summer of next year given the fact that you see a lot of economic warning signs that aren't going to be helpful for corporate profits? >> i think it's possible to get to year-end. i wouldn't say that i have as much conviction as i did earlier just because of where we are. and really because if we get weak macro data, if we get another bad payroll report or other weak data it's arguably going to be positive for the market as we saw last friday because people are not afraid of weak macro data they're afraid of higher interest rates. you have to get through that fear. i don't know what level interest rates need to fall to until bad news becomes bad for equities.

watch credit spreads. that will tell you when. >> that's a really interesting point. so once we get through a couple of the reports where people then go yay, the fed's going to cut rates, but as soon as we start to see that those spread dynamics change maybe that's the sign of a trend. >> last year was cpi. coming down, that gave us relief. that's all good. if it's employment today providing that bond relief, that comes with a side of problems. >> thank you. good to have you in the house. >> really appreciate it. >> all right. more details leaking out on the massive reorganization under way at citi. the corporate overhaul returned to internally as project bora bora, which potentially includes deep job cuts across the board. cnbc.com banking reporter hugh san is here with more on this. hugh, welcome. why the name project bora bora? we'll get to the substance here. but i wonder about the cosmetics there. >> yeah, it's a little bit tone deaf. honestly, i don't really know why. maybe it's somebody's idea of a great vacation place. but clearly citigroup employees

aren't calm. they're very agitated. they're very anxious as this process unwinds because it's going to result in a lot of job cuts, tyler. >> this stock hasn't gone anywhere really for a long, long time. is that what's driving this process? >> it's not just that, you know, jane fraser and three of her predecessors have struggled to really get a hold of this mess that is citigroup. it's just that even in her tenure, which has been 2 1/2 years, the stock is down 37%, which is the worst performance among her peers. expenses have climbed about 20% during that time. and that really shows you the bind that she's under. i think the story here, tyler, is she's in a fix. and for her to get out of that situation she's going to need to cut expenses. and the way to do that is by getting rid of bodies. >> and where will those bodies come from? are they executive bodies? is it across the board? is it u.s.? is it foreign? what? >> i think what's interesting here is this is one of those

rare culls that's actually going to hit the senior levels worse than it hits some of the junior levels. you know, the sources that i've spoken to have talked about job cuts in the scope of at least 10%. now, the higher that you climb in the org chart at citigroup those numbers are going to look worse because jane fraser's been very clear about getting rid of regional heads, co-heads, people with overlapping responsibilities. and i've learned that even this month they're going to get rid of folks with -- to take a step back, citigroup, they have a lot of people with a lot of nice titles. so chiefs of staff, chief administrative officers, these are the types of people who are going to get eliminated later this month. and the reason for that, tyler, is clearly they've had a run of expense growth. she's talked about raising their returns to at least 11%. for her to get there she's going to have to both grow revenue and cut expenses and probably use her capital -- her balance sheet more effectively. with revenue growth a little bit

blurry for next year. clearly there's the possibility of recession, the possibility of greater credit losses. you're really left with this one lever to pull, which is to cut expenses by getting rid of jobs. >> and hugh, to that point she can pull back on head count but how do you grow revenue at the same time? >> well, that's kind of the conundrum she's in, kelly. she's getting rid of a bunch of overseas units. that hasn't really even flowed in to cutting expenses at this point. that is why if you talk to people, i haven't spoken to one investor or one analyst who actually believes they're going to make their really modest return targets and their expense targets in the next few years. there is deep skepticism about the stock. that's why it's trading at less than half of the average of the u.s. peers and a third of the folks the likes of jpmorgan and morgan stanley. kelly? >> hugh, we have to leave it there. hugh san, thank you for bringing this story to us. meanwhile, china's president

xi jinping will visit san francisco next week, and while he's in the country he will meet with some of the u.s.'s biggest ceos. eamon javers in washington with more on this. hi, eamon. >> hey, tyler, you're right. sources familiar with the event tell cnbc that some of the country's top ceos are expected to dine with president xi jinping while he's in san francisco for the asia pacific economic cooperation summit there next week. the dinner which is expected to attract hundreds of attendees to a hotel in downtown san francisco will be an opportunity for the chinese leader to demonstrate to the u.s. government that beijing has powerful friends here inside the united states and also to show his domestic audience that he's being warmly welcomed in the united states. it will be a dramatic moment, though, in the relationship between the two countries. some of the top capitalists here in the united states breaking bread with the leader of the chinese communist party. no specific ceo attendees are confirmed just yet. but you can imagine that a lot of companies are mulling over what their strategy is going to be for that dinner. >> swhaels xi going to do and

will he be meeting with and will there be at this dinner government officials including all the way up to the secretary of state, the president? >> well, we don't know the full agenda of this meeting. there's been a pretty tight lid on exactly what is going to be on the agenda. we do expect xi jinping to have that face-to-face meeting with president joe biden, but we don't have a lot of details about exactly how that's going to take place. all of this happening at the apec summit with the asian pacific countries, representing the economic development effort in that region all attending as well. so this is going to be a very big event in san francisco next week, and it really is sort of this new superpower poll of economic power. each superpower trying to pull those countries into their orbit. all that will be on display in san francisco next week, tyler. >> eamon, thanks very much. eamon javers reporting. coming up, "the big fail." nearly four years from the beginning of the covid-19 pandemic and one question still lingers.

were shutdowns a successful response to the virus or a simply failed experiment? we'll discuss that. plus rate relief. with the fed pausing on rate hikes, regional banks are getting a much-needed breather. the kre etf climbing to almost $42 a share.

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check out the kre regional bank index kelly mentioned a

moment or so ago. up 9% the past week those banks rallying as they get some much-needed relief following the fed's decision on interest rate and chairman powell's press conference. let's bring in leslie picker now for more on the regionals. do tell, leslie. >> hey, tyler. yeah, regionals especially in the last week or so moving inversely with rates. that's true today as well. you saw there the bank stocks in the red as yields tick higher. but last week the decline in rates made for the best performance for kre in three years. a new note by bank of america this morning says, quote, peak interest rates do have the potential to serve as a minute cy clearing event for bank stocks they're forming reasons for that. number one, it was clear from q3 earnings that regional margins continue to be squeeze bit higher deposit rates which are correlated with interest rates. the concept of peak rates if true could relieve some front end cost pressures for banks. number two and three, commercial real estate repricing and the potential for credit losses,

lower rates make those areas more palatable on bank balance sheets. and oh, yeah, speaking of balance sheets, lower rates help reverse some of those unrealized losses that we've seen over the past few years or so. according to the fdic those amounted to more than 558 billion at the end of q2. we'll get q3 composite figures next month from the fdic. but remember, many banks took on more bond investments during the pandemic when they were flush with deposits but yields were low. so more recently as yields soared the value of fixed rate bonds plummeted contributed to paper losses for the banks. now, it's unlikely those losses will ever be realized, but it does impact tangible book value in the meantime. so in theory when rates decline tbv growth accelerates. guys. >> leslie, i just want to ask you by follow-up late last week there was a glitch that knocked out part of the banking transfer system. several companies that i'm aware

of couldn't pay their workers. what happened and has it been solved? how many were affected? >> yeah, it's pretty interesting, tyler. according to fed -- according to the fed this was due to a processing issue with the electronic payments network will operates the automated clearing house, or ach. that's the group that processes transactions. so on friday customers at wells fargo, jpmorganchase, truist, u.s. bank and bank of america were impacted although it was only a small proportion of depositors. reports have shown that less than 1% of daily ach volume was affected and the issue has reportedly since been resolved, guys. >> all right, leslie, thank you very much. leslie picker reporting. >> for more on the regional bank rally let's bring in senior research analyst covering u.s. banks david george of robert w. baird. david, thank you for joining us today. we're making a lot out of this 10% move. are we making too much of it? >> no, i don't think so.

like leslie mentioned a moment ago i think the movement in rates last week combined with the bullet point or two i would add to your prior commentary is the first positioning within the banks is very low. i think market participants are significantly underrepresented in bank stocks and additionally valuations of this group are extremely attractive from our standpoint. they are as cheap if you look at them on a preprovision net revenue basis, which is how we think about these stocks. they are as cheap as theywere in both the covid pandemic as well as the gfc. those are the only two times, kelly, when these stocks were cheaper. so given the move in rates combined with sentiment and positioning, we think that the rally is justified and we think over the next 18 months there's still very significant upside in a lot of these names. >> i think the problem is a lot of people might feel that they want to wait till we get through the downturn that could be coming to kind of peek under the

carpet. they don't feel comfortable yet until we move through the really down part of what could be the coming credit cycle. >> yeah, that's right. and obviously anytime we're making stock calls or longer-term calls you have to have a view as to how the future's going to play out, which is obviously unknowable. now, from our perspective that is where valuation comes into play. from our standpoint at least if you have a high margin of safety you've got the ability to withstand unexpected shocks. and that's essentially what we've experienced in this group over the last six months. what we have seen, kelly, is a funding shock and the fed tightening much more significantly than we've ever seen, at least in my 25-year career. and that resulted in a significant shock and funding costs, and what is going to happen and i think has been kind of underreported and not really discussed among market participants is in the next 18 to 24 months what we're going to see is a significant asset repricing on the heels of this fed tightening.

so what i mean by that is you're going to see positive repricing in both loans and securities. so with the group priced for what we think is permanent impairment in profitability we think you're going to see a mean reversion and return on assets and equities in the banks the next couple of years and that should result in much higher stock prices for this group in our view. >> i was going to ask you what the level of patience required here. but i think you just answered it. you said 12 to 18 months. am i better off buying individual names here or going with the kre with an etf and just playing the sector? >> i think you can do both. a lot of that, that is really a portfolio management question rather than an individual stock question. and to your question on timing, it is always imperfect. and as you saw last week, we had a 10% move in the kre. we had several stocks on our list that were up 15%, 20%. if you wait for the good news to come, you could miss half of the

move. and even though this is a kind of an arguably boring group over the last decades on i aday-to-day basis, if you wait for the good news to come you tend to miss what we call kind of the easy money in these stocks. so i think it's important to really think about valuation and margin of safety. and many of these stocks, tyler, are trading at five, six, and seven times earnings and have 6% and 7% dividend yields that we think are more than secure here. so we're okay getting long these stocks, having imperfect information and lack of visibility. if the stocks were 30% or 40% higher, we would feel differently given the uncertainties out there. but here we think pretty reasonable risk reward. >> and you don't feel i've missed a big hunk of the easy money from last week, clearly? >> no. i think that 10% move is very warranted. and if the fed is done and

credit quality holds you could see a 20% to 30% move in these stocks in a very short period of time. this has happened many times. we've been doing this for 25 years. this has happened many times where you get one piece of good news and market participants' sentiment in that group shifts meaningfully and that could result in a meaningful move of these stocks. especially if you see any type of sector rotation out of some of these mega cap areas like tech where if you take -- if portfolio managers decide to sell a small amount of apple or microsoft that results in a lot of market cap to buy in what i would call a mid-cap sector like regional banks. >> all right, david, thank you very much. david george, we appreciate your insights. >> thank you. >> thank you. further ahead, the beleaguered ivy league colleges and education in general struggling over the past year between shrinking scores on achievement tests, diversity debates and growing antisemitism on campus. we're going to take a look at

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welcome back to "power lunch," ev. bond yields bouncing back today after a sharp drop last week.

let's get to rick santelli in chicago for the explanation. what's going on, rick? >> well, i'll tell you, tyler, if you're a technician these are the glory days if you're trading the fixed income, especially u.s. treasury market. look at a two-day of 10s. tyler, what you're referring to is that low made not too long after we had the jobs jobs jobs report that was on the weak side. we violated 4 1/2% on an intraday basis. that's a key point. 4 1/2%. because if you go back and look at an early october chart we could clearly see that we came very close on a closing basis but failed to close above 5% but did violate it on an intraday basis. so 4 1/2%, 5%. those are big round numbers and they work like a charm. as a matter of fact, the outside session on the 23rd had many traders short looking for higher yields. many of them covered not only because of jobs friday but because the week and the geopolitical events. right now you have what's referred to as a parallel shift on the yield curve, where

basically up eight basis points in the front, we're up eight basis points in the back. and if you look at a july of last year start to that spread between 2 ands 10s basically early july 22 was the last time it was at zero or positive. the reason i bring that up, because many traders are looking for the long end to continue to outperform and resteepen the curves. you know, we can all say the fed may be done, and that's a big deal. but remember, the long end isn't under the fed's thumb and as long as they're not doing qe the long end has a life of its own. >> a life of its own. rick santelli. let's get to dom chu for the cnbc news update. >> good afternoon, kelly. the white house says the president and israeli bprime minister benjamin netanyahu spoke today about potential tactical pauses on strikes on gaza. those pauses the white house says would foshlly allow for the release of hostages or more

humanitarian aid to be delivered to gaza. u.s. officials say not enough supplies are crossing the border with only 38 trucks entering gaza within the last 24 hours. senator susan collins and angus king from maine are asking the army to provide a full account of interactions with the army reservist who killed 18 people in a shooting at a bar and bowling alley in lewiston last month. the governor of maine says concerns about the shooter's mental health were broughtto the attention of the army national reserve unit. the army says it received the request and is working toward a response. and the pope talked and joked with crowds of children this afternoon after a brief health scare earlier in the day. the vatican said the 86-year-old pontiff, who is missing part of one lung, had been suffering from a cold when he decided he was not well enough to give a prepared speech in the morning. the pope kissing babies and talking with kids. kelly, i'll send things back over to you. >> thank you very much. dom chu. still to come on "power lunch," addressing the elephant in a room. a new book by bethany mclean and

joan el sero reflecting back on covid-era shutdowns and asking the hard question why wr they a failure and what's the lasting impact? bethany joins us next to answer that question. (adventurous music) ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia.

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welcome back to "power lunch." covid-era lockdowns were put in place with the idea of keeping the public safe and holding the spread of the virus. but they ultimately led to the shuttering of schools and small businesses and many americans are still feeling the pain of that. our next guest is now posing the questions were the -- posing and answering the question were the lockdowns even worth it. joining us here now for more is cnbc contributor bethany mclean. she's also co-author of ai new book "the big fail: what the pandemic revealed about who america protects and who it leaves behind." and your co-author on that is my friend joe nocera. two of the best writers i know collaborating here. so congratulations on the book. >> thank you. >> it's a very interesting argument. but let me go back and let's spin the clock back to the spring of 2020. and the summer of 2020.

at that time there was no vaccine. at that time there was very little known about the virulence of this virus. what was known was it was affecting a lot of people. so you argue that the lockdowns didn't really work and in fact did a lot of damage. but at that time and into and through 2020 weren't the lockdowns an understandable public policy response to what was going on? >> so i think we can all draw the line as to when an understandable response became a mistake. and i agree, it's a little bit of a slippery line. but i'd argue that we knew the costs were too high long before the end of 2020. and the reason i say that is because the data was pretty clear early on that kids weren't affected by this nearly as much, that they weren't dying from this, and that the terrible outcomes were clustered in

nursing homes and people who were older and people who had pre-existing conditions. and so i think it was pretty clear early on who needed protecting and who didn't. and i also think it was pretty clear early on who was bearing the costs of lockdowns and who wasn't. in other words, if all of us, and i use the word "us" broadly, had lost our jocks, been unable to work from zoom and been told we had to go be essential workers out on the front lines, you might have heard a lot more pushback to lockdowns in the media than -- and elsewhere than you did. >> so then my natural follow-up is we were sort of protecting everybody when really we needed to protect the vulnerable who were the elderly, those in nursing homes who were in assisted living facilities and so on and so forth. so why then did lockdowns have such carry in many states? why then did schools stay locked down as long as they did?

in my community for the full year of the 2021-22 school year. >> yeah, so schools in america stayed closed in a way that is in quite a contrast to places in most of the rest of the world. and i think we have to ask ourselves why that was given the incredible amount of damage that that has done to really the least privileged children in our society and the people we all say we really want to protect the most. i think there are a few reasons for it. i think teachers were legitimately afraid and i don't think public health officials did a good job of communicating what the real risks of this virus was and how it was transmitted, nor did we see a lot of huge headlines when it came out that transmission rates in schools that were open were actually pretty low. i think the children of a lot of privileged people were able to go back to school because private schools opened whereas public schools didn't. just think of california and

gavin newsom. his kids were in school while the public schools in the state remained closed. and i think we began to make this incredibly unfortunate connection between what your politics were and what your stance on the virus should be. so once donald trump said i want schools reopened it became a thing to say oh, no, no, schools can't be reopened, just to show your opposition to trump. and really if you think about it, isn't that a tragedy? >> a lot of this book, bethany, is really about the health care system. how much of the motivation behind it was to talk about those failings? what are the failings? and what if anything have we learned about it? because the system seems to me today to be exactly what it was three, four years ago. >> good point. i'm not sure we have learned anything. i've become a little more cynical, as you guys probably have too over the course of my career over what we learn and what actually changes. but yes, there was a study that came out after our book was published unfortunately that associated higher rates of covid

deaths not to lockdowns or lack of lockdowns in the united states but rather to trust in the system and access to health care beforehand. and so one of the points of our book is that the pandemic really exposed a lot of pre-existing conditions in the u.s. that almost guaranteed that covid was going to hit us particularly hard. and one of those is the dismal state of health care for many people in this country. >> when we talk about the dismal state of health care, are we talking about government-provided health care? are we talking about the private sector and the way that that's run? what would you say would be, you know, the policy recommendations if any to come out of this? >> i talk about really the conflation between the two. we pretend that the hospital sector is for profit, and in some ways it is. and even big -- well, it obviously is. publicly traded hospital chains. and a lot of not for profits are now essentially run as for profits as well. but we don't do a good job of saying what are the preconditions for a hospital to be able to thrive? we pretend that it's kind of a

free market referendum. but it really isn't. government reimbursement policies dictate which hospitals survive and thrive and which ones don't, and hospitals that actually do the best are the ones that are the most skilled at taking advantage of government reimbursement systems. so i think one of the larger points of our book that we tried to get at is the responsibility of government to set the right rules both for the free market and for society. >> qi >> quick question, quick answer if you might, bethany. what y. did so many public health officials including anthony fauci back the lockdowns? >> so i think they were desperate to do something. and i don't necessarily -- it goes back to our leaders setting the right rules. i don't necessarily blame a scientist for saying what that scientist thought was the most effective way to stop the spread of covid. what i do blame are our leaders for not saying okay, this is what a scientist says, but what are all the other costs associated with lockdowns? small business closures, people

dying from lack of access to health care for other conditions like cancer, kids not being able to be in school. are these tradeoffs worth it? and i think our leaders hid behind public health officials like dr. fauci. and so if you're going to be mad at anybody don't be mad at dr. fauci for saying what he believed. be mad at our elected officials for not being strong enough to say we're the ones who are supposed to be leading here. >> bethany mclean, thank you very much. and i look forward to reading the whole book. seems cool. thank you. good to see you. >> thank you. >> and coming up we're going to dig more into this issue of school daze. the pandemic dealing a big blow to the quality of education across america including colleges and universities as that list of headwinds continues to grow. we'll do a deep dive on the whole situation when "power lunch" returns. ameritrade is now part of schwab.

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in a crisis caused by a terrorist massacre. warning civilians to clear out, while hamas forces them back. allowing in food and water, which hamas steals. . welcome back to "power lunch." we just spoke with bethany mclean about the challenges that students and educators have faced post-pandemic from the quarantines to kids then falling behind following extended periods of remote learning and staffing shortages. there have been plenty of difficulties to navigate. now data kind of puts that into quantified terms showing the

average score on the a.c.t. just fell to a new 30-year low. it's actually the sixth consecutive year of declines. let's get some insight on the state of education and the impact this could have on the workforce over time with arne duncan, former u.s. secretary of education and managing partner of emerson collective. and also sal khan, founder and ceo of the khan academy, a non-profit educational organization. welcome to both of you. really appreciate your time. secretary duncan, let me just start by asking one question, which are are a.c.t. scores going down because they're optional now? what's the tail and what's the dog here? >> well, first of all, thanks for having us. i'm a huge fan of sal's. we do some work together. so now, whether it's the a.c.t., whether it's other metrics, by every measure our education system is declining and our children are performing more and more poorly. so we don't need to -- it's like a crisis. we don't need another wake-up call. we need to do some things very, very differently. and what we need to do is begin a conversation. let me just start by saying we

have to make learning the constant and time the variable in education. and historically, time has been the constant and learning has been the variable. we have so many children who are so far behind that they need more help after school, they need to be in school on saturdays, weekends, over the summers. we have to have that kind of flexibility. one size fits all mentality isn't fitting much of anyone and wasn't before. and post the pandemic, post covid, we have to think very differently, what's right for every single individual student. how many need five meals a week? how many need ten meals a week? how many need 15 meals a week? how many need extra help in terms of mental health? we have to think differently as adults to meet our kids where they are and help them go where they need to go. >> secretary duncan, one of the things that has i guess arisen in the public discourse in recent years is that the culture wars have gotten into questions of the school curriculum. my question for you is isn't

there a reasonable role, an important role even for parents and their elected officials to play in determining not only what is taught but how it is taught and what is read and when it is read in figuring out what should be in a a school curriculum? don't parents and their elected officials have a role to play here? >> they absolutely do, and i'm always going to be the biggest proponent for parent empowerment, but i want parents empowered not because of fear or we're trying to scare them, but out of hope and being transparent where their children are. a couple examples vast majority of parents think their children are performing are grade level, usually 80 or 90%, across the country it's often 20 or 30%. there's a disconnect between how children are doing in terms of reading and math skills and what parents think.

we've been lying to parents. we have to tell them the truth where they are an then partner with parents. parents are always going to be our children's first teachers and always the most important teachers. we have to empower parents and help their children be successful. that's ha parents are looking for, is honest, transparent information and workr, all of us as adults, to get their children where they need to be. if you drop out of high school you basically have no good options and some form of higher education has to be the form, four-year university, two-year community college, technical training, whatever it might be. with parents and other leaders. >> i think the reason the a.c.t. test scores being so low is because we're looking for objective ways of measuring what's happening in the school system and as other charts have pointed out, gpas continue rising and doesn't seem like that's the most trustworthy information. a lot of parents looked at the curriculum the kids were

supposed to be learning at home and were surprised maybe it wasn't as rigorous or academic as they had expected. objectively speaking, how do we know how much our children are learning and what do we do if we're looking for improvements in that regard? >> objectively we know unequivocally without a shadow of a doubt -- >> let me let sal answer. sal, go ahead. >> i probably would say what arne is about to say. it's all about transparency. if parents know, there's very few parents who would not want to take some action to do that and there are things they should be able to do. as bad as the pandemic was and we see declines, even where a.c.t. scores or s.a.t. scores or state standardized test scores prepandemic was not a place to aspire to. a 20 on the a.c.t. if you look at the questions are not really showing someone is college ready, even before the pandemic. 60, 70% of students who show up

at college who decide to go to college, the top half of students, most of them aren't ready to learn algebra and not ready to write, writing at a middle school level. this is a problem. we try to -- there are tools here, khan academy, it's free, we're not for profit, it gives parents agency, control over what they can do and can be used in a classroom as well. i'll just triple underline what arne says. we have to make this more transparent to parents and give them things they can do. not every parent will be able to afford tutors to help their kids. >> how much, sal, did the pandemic set back learning for let's say a high school freshman, what my son was when he -- i said he was in high school but had never been in the high school. >> yeah. you know, there's still research coming on. i think it's clear it did create a setback and unfortunately it created a disparate setback. it wasn't just academic.

>> no. >> even in the social-emotional side, there are students who are still wearing masks because they don't want to show the bottom of their face. they haven't learned to feel comfortable with them. i think we have to wrestle with those social-emotional type of byproducts of it, but on the academic side it's been unequal. you see the averages have gone down, but the reality those of us who had resources or kids went to private schools, those kids kept learning and accelerated because their learning became personalized and other families their kids are the ones bringing down the average because they got less support. >> interesting stuff. thank you very much. sal khan and arne dunc, an you very much for your time today. "power lunch" will be reich. -- right back.

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time for today's three stock lunch. the way to play the recent market bounce screening for stocks up 10% or more off the 52-week low or 10% or more over the past month. with our trades is david trainer, ceo of new construct, investment research fund and we begin with amazon. buy, sell, hold? >> you know we would sell amazon for sure. i mean the company's valuation implies it's going to grow profit at 20% compounded annually for 20 years, and generate free cash flow of $200 billion a year and over the last five years, has burned $150

billion. so most folks kind of get the narrative on amazon wrong. they think it's a profitable great business, but i'm not sure it's as good as people think. >> you would unload amazon. all right. moving on. >> moving on to news corp up 45% from its 52-week low. that's quite a move for you. would you be chasing this one? are you a buyer? >> kelly, no. we think, you know, the media business in general is really competitively challenged. anybody with a keyboard and an internet connection can create content. we have even this proliferation of free content. most of it not so good. people aren't all that discerning. we think the business is fundamentally competitively challenged and the valuation at this point is expensive. we would want to unload this one too. >> unload it. all right. well unload it brings us to dollar tree. >> dollar tree, what would you do with this one? >> this company is definitely much better positioned. we think as the economy continues to slow and rates start to clamp down on economic

activity, we'll see more consumers downshift into more of the dollar tree category of spending and we think that's good for this business. we think it's a tad expensive and tell investors to start nibbling around $100. >> how do you see the economy unfolding over the next six months? we began with michael can toe witz, pointing to warning signs he sees in the economy, not calling for a recession, but how do you see the economy unfolding? >> i think it's going to be a slow, sort of suffocation. it's not going to be the traditional style crash everything and everything has to go to zero and purge all the bad investment. for us to have a real turnaround in our economy, we've got to slowly kill off the zombie stocks and companies. if we don't, it's going to be back to buy the dip. so this has to be something that takes a while and forces a long-term change in behavior. >> thank you very much. that's a phrase that's going to linger with me for the rest of

the day. a slow sufcation in the economy. thank you. >> pick your horror movie analogy. the dow has gone back into the green. we started with a gain of 106 at the highs, turned negative, now up by 12. >> thanks so much for watching "power lunch." >> "closing bell" starts right now. kelly, welcome to "closing bell." i'm scott wapner live from post nine of the stock exchange. mark lasry with us in a bit and his new sports fund as he looks for new investment opportunities. in the meantime the make or break hour begins with the bull case for stocks and why some argue the rally into year end could be getting started. your scorecard with 60 minutes to go in regulation. a much needed and deserved breather after putting in the best week of the year. small caps leading declines today after a solid five-day stretch. your score card as i