>> a lot of call buying, akamai. >> huntington. >> priceline. >> stephanie link. >> amtrust financial. >> all right. that does it for us. have a great rest of the day. also follow me on twitter. @scottwalkercnbc. second best day of the year for stocks, and "power lunch" begins now. day ten of the government shutdown and six days and counting until america hits its debt limit. investors look for the signs of a break in the budget stalemate in washington. will a deal be done in time? the u.s. economy is at stake. how is the drama in d.c. impacting average americans? and what should individual investors do if there is a debt default? a special edition of "power lunch, protecting your money now, askcnbc" begins right now. >> and we welcome you to a special edition of "power lunch." i'm sue herera. it looks like we may have a little bit of a break in the budget impasse in washington. speaker boehner asking house gop

members for a short-term debt ceiling increase. however, this is very far from a done deal. the market is reacting to the upside, but analysts that i'm talking to say this is mostly short covering by those who were betting that we would go right up to the debt ceiling. so this is a market you want to be extremely careful in. the dow jones industrial average up 237 points. the nasdaq is up 73. a full 2% move. the s&p 500 is up 27 points. and while our political leaders try to hammer out the deal, the shutdown and the debt threat is having a very real impact on average americans. many are fearing about the loans that they have, their savings, their 401(k). so in the next 30 minutes, we're going to answer your concerns and your questions. we already have some of them, but you can add to them by going to twitter and facebook facebook, #askcnbc. joining me is michael, president of seaborn mortgage corporation

along with c nchnbc's sharon epperson and jean chatzky. we're so glad to have you here. tyler is down at the nyse at my usual post, but we switched places today. ty, down to you. >> sue, thank you very much. it's a very interesting day here, not the least because the dow is up so much. the question on everybody's mind right now is really what should investors do with their portfolios? and joining me here at the nyse is our cnbc market analyst, kenny polcari and from los angeles, personal finance columnist liz weston, author of "deal with your debt." welcome to both of you. we're also going to take this program to main street. we have our cnbc cameras at -- yes, yes, the tick tock diner in new jersey. i have been there many a time. they serve a great sunday breakfast. my kind of place, baby. and also out at universal city walk-in los angeles, we'll take

your questions throughout this special edition of "power lunch." sue, you haven't lived till you've been there. >> i know, i've been there, and they do a great breakfast. and they also have a lot of people there are questions, and we'll get to those in a second. the market is rallying right now. we're taking your questions on twitter, facebook and as ty just mentioned, live on location around the nation. let's start out with a question from amy who tweets, "what is the one signal or move that the house makes or that the market makes that is the tipping point for investments?" jean, i'm going to start with you. we may have seen that with speaker boehner, but we don't know yet. >> we don't know yet, and i would caution any individual investor against looking for one signal, one cry to get your money out because as we know, this trying to time the market really doesn't work most of the time. and your best -- your best move is going to be to make sure that you're balanced in a twway that works for you and hopefully ride

it out. >> yeah. sharon? >> i think a lot of people want to know when is going to be the time i should get in or out of the stock market. and that's not what you should be thinking about in terms of what happens in washington. it depends on when you need that money. and so that's what you need to be thinking about, not when something happens in terms of the debt ceiling debate. so if you need this money in five years, it shouldn't be in stocks in the first place. regardless of what's going on in washington. i think a lot of people forget about that. if it's in stocks and your retirement plan and you're not retiring for a long time, you'll have to ride this out. keep to your plan. >> michael, what have you seen with people's ability in interest vrates, what are you seeing in terms of their ability to get a mortgage, the government's shut down. has it affected your business? >> very much so. i've been in this business over 25 years, and i've seen nothing like it. for example, i have people that are closing this month, jumbo loans. in my market that's over 417 in hartford county.

if i can't get a verification of their income with the irs, we do that now because of dodd/thank and other legislation that we can't take tax returns and w-2s. we have to get an irs transcript saying the income they're showing us is what they showed the irs. we can't get those, we can't close them. i have purchases, not just refis. it's a raeg bill problem. >> i want to talk about interest rates again in just a second. speaking of which, we have a bond auction that's going off the board, and rick santelli has the details. what did demand look like this time? >> reporter: hmm, how about off the charts, "a" plus on this one! >> really? >> reporter: it only took 225 doubt points to pull out a spectacular auction, and the 29-year ten-month, because this is the second time reopening an issue originally opened in august. the yield, 3.758. that yield is lower than even the offer side of the one issue market. haven't seep thn that in a whil.

indirect's at 41.9, best since november of last year. direct's at 22.6, best since june of last year. this is what a good, high-demand auction should look like, and one of the slightly more cynical brokers behind me said and probably be buying the same issue in about 28 hours. back to you. >> that could be very much true. thanks, ricky. at least we pulled out one "a" on the week. ty, down to you. >> and that is how a good auction ought to be reported, when all the punching in the air and everything from rick santelli. let's take a question from flip. he posed this question to us. i think kenny and liz, i can anticipate your answer, but here it is. "i worry about the market's reaction to the debt ceiling. would it be wise to pull all my investments out of the market until the vote?" kenny? >> absolutely not. why would you do that? and i think sharon just said it before is that you have to look at who you are and where you are in the cycle. if it's a long-term investment,

an i.r.a., it's money that's 15 or 20 years down the line, the last thing you should be doing is pulling it out. >> but liz, do i want to boost the level of cash in any of my accounts so that i am less exposed? >> well, here again, you have the issue that you are trying to time the market. and people don't do that very successfully. the problem is, you get out, and then when congress finally gets its act together, you miss the rally. and there will be a relief rally when they finally decide what to do. >> look what's going on today. over the last couple days we saw the market get crushed day, day, day as every day wore on, it was more and more pressure and people were starting to get really nervous. and so if you sold out on monday or tuesday or wednesday, look what's happened today. right in your face, on a rumor that they're coming to an agreement agreeme agreement. if it becomes real, then we're even going higher. exactly to your point, it doesn't make sense for an individual in their retirement fund to try to time the market. >> let's go out to the tick tock

diner where if they're not eating the spinach, feta and tomato omelette, lorraine, you're on. >> hi. my question is about my retirement funding. my 401(k) and other portfolios we have. is this going to affect that? >> repeat the question again, lorraine? >> we're worried about our 401(k), are retirement portfolios, because we're close to 60, and we want to know the money's going to be there. >> is the money going to be there? jean chatzky, why don't you pick up on that one. sl >> sure, absolutely. it's a matter of when you need those particular dollars. of course, of course this is going to affect your 401(k). it's affecting the markets, and it depends how your particular investments are allocated. you've got money in stocks, they're having a really good day today.

but as sharon said earlier, the money that you need in five years, within five years can stay in your 401(k), but it shouldn't be in stocks. it should be in safer places. >> let's move -- so there's the thing, the five-year rule, money that you're going to use within five years, keep it away from equity markets and goes with safety in that case. rob from morristown has a question. rob, your turn. >> yeah, good afternoon, guys. i was curious if there's any stocks i should be avoiding or maybe shorting with the whole government shutdown. >> stocks to avoid or short. kenny, do you want to take a whack at that one? >> well, listen, i'm getting the sense, then, that we're talking about a different kind of money, right? you're talking about trading money that you're in and out of the market with, not necessarily money that's long term, am i correct? >> correct, yes. >> so if that's the case, you're either going to pick -- you know, would you rather pick individual names or would you rather pick individual groups like technology or the financials or the banks? because in the event that we do go over the edge, certainly the market in general's going to come under pressure.

so no matter what sector you're in, so maybe you think about, you know, playing the market short broadly, right? versus an individual name because in that case, the whole market's going to get whacked temporarily because then once it comes to -- once it comes ba being to stabilization, then expect the market will stabilize. >> i don't want to put words in your mouth, kenny, but you seem to saying if you want to take that trade, you could short an etf. >> an etf versus an individual name, correct. >> if you think the market is going to go -- >> or you could buy one of the etfs that as you buy it, it makes you short, right. >> you know what, kenny, though? shorting -- you've got to be really adept when you're shorting because what's happening in the market today is all those shorts that are on the wrong side of the trade. >> well, and that's why i said to him right at the beginning, i'm assuming you're just talking about trading money because he seemed to be that kind of a person, that he was trading it, right? so i assume, then, he understands what the risks are. >> right. all right. michael, i'm going to get to you

in just a second because it has to do with this next story. you know, yesterday we brought you the news that the mutual fund giant fidelity says it no longer holds any u.s. government debt that comes due right around the time that the nation might hit its borrowing limit. so that has got us thinking about money market funds and whether or not people really understand what they are and whether or not they're safe. sharon epperson took a look at that, and she's got some details on it for us. >> yes, i do, and there's a lot of money at play here. we're talking about institutions and average investors that have nearly $2.7 trillion invested in money market mutual funds. now, fidelity, the largest manager of these funds, is taking precautionary steps to protect investors. just in case the u.s. government faces a technical default. fidelity says its money market funds do not own any security issued by the u.s. treasury issued in late october, early november. just to be safe, it's increased the amount of cash in u.s. treasury funds. and also stress tested money market mutual funds. it says, quote, we believe they can withstand significant market

volatility. now, money market mutual funds are typically very safe places to park your money. with rates that historically have been higher than savings accounts. but unlike money market deposit accounts or high-kwleeyield sav account, these mutual funds are not insured by the fdic. money market mutual funds invest in short-term debt, and if the treasury unares out of money due to default, fund managers don't want to be holding on to government debt that can't be repaid. i talked to money fund expert peter crane, and he says that that's not likely to happen. even if congress plays a game of chicken over the next couple of weeks, the bottom line is the treasury will pay its debt, and investors will get 100 cents on the dollar. now, any delay that we see in payments, it should be brief. so the big question is, investors are anxious right now, but what they probably should do is nothing. >> nothing at all. well, michael, i with a unt to talk to you about that because we did get a couple of questions from viewers who said you know what?

maybe the best thing to do is to buy a home right now and use it as an investment, as a core part of my portfolio once again. are you seeing that from people now that housing seems to be recovering, that interest rates still remain relatively low and people seem to feel more comfortable about that asset class? >> well, i would say i did see it. we're not seeing it as much as we were in the spring. when rates went up -- and even though they're historically still very good, we went from 3 3/8 to 4 7/8 in three days. but on a $400,000 loan, that's $260 a month. it's a significant amount of money that people either can't afford to pay that higher payment or it's eating into their buying power. but in the spring we had, like, a perfect storm where rates -- people knew couldn't get lower and prices have stabilized. and people were buying. and that just evaporated after that fed -- you know, the fed chairman made that announcement. >> it's just so funny because i remember my first mortgage was at 15%. you know, so i have the institutional memory of higher

interest rates, that the class of first ha-time buyers doesn't have. >> that's true. anytime something goes up a 30% increase -- >> so it was the velocity. >> exactly. and the timing was just a few days. years ago when you saw the rate, that was the rate people would get. now it's based on your loan to value and your fico score. most of them are probably a quarter or a half above that. and people are stretched thin right now. and the recovery is fragile. in a way what's a problem in this country where our interest rate policy is national. it's not regional. so some parts of the country could withstand an increase in ate rates like this. others can't. now it's petering out. now the fact that i can't even close loans that people have a contract and have a good rate, that's even added to the problem. >> ty, down to you. i think we have a guest out in l.a. >> we do. we're going to go back to l.a. to citywalk. liz weston is there with roger from spanish fork, utah. roger, what's your question? >> roger, what's your question for us?

>> i can't hear anything. >> go ahead. just tell them what your question is. >> the question was what's going to happen if they vote to the debt ceiling? >> so if we go over and they don't have a solution, basically? >> they don't have a solution and we don't -- and we don't increase the debt ceiling, that's the question that i've been thinking about, what's going to happen. i think that's what's causing fear in a lot of people. >> liz, take a whack. what do you think's going to happen if we go over the debt ceiling if only for a matter of days? >> yeah, i think there would be a lot of reaction. i think right now what we're seeing in the market is wall street doesn't really believe that congress would be stupid enough to let the country go over the cliff and default on its debt. if it should actually happen, you know, the stock market's definitely going to swoon. i can see the start of another credit crunch happening. you know, it depends on how long this plays out, obviously, how bad things get. but i think there will be a

fairly sharp reaction to what's going on. >> kenny? >> as we've seen, wall street thinks this is going to get worked out. >> i agree with you but they're going to push it right to the brink. in the event it goes over, even if it's a day or two, you'll have a quick and violent reaction, and then someone's going to come to their senses, and it's going to stabilize it and once again start to move higher. and the fear or the thing that investors should be watching for is the speed at which that happens because it's going to happen fast on the down side, it could happen equally as fast on the upside if they then come to a decision and an agreement. >> we're going to take a quick break. here's a question from shahid. do you think this will cause another financial meltdown that will result in the dow dropping more than 800 points in a single trading day? kenny polcari will answer that one on the other side of this short break. you're watching a special edition of "power lunch, protecting your money no now #askcnbc" with your questions. we'll be right back. ♪

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welcome back to this special edition of "power lunch." we're talking about your money in light of the debt crisis in washington. we do have a little bit of a break in the impasse, but it's not a done deal yet . so we've been taking your questions all hour on what to do with your money. michael came to us via our facebook page with a question, "do you think this is the same situation that occurred in 2011, and is my money safe in the

bank?" jean chatzky, i'm going to go to you for that because sharon, i think, gave us a good outline of what a money market is and why it's not insured in the same way that your money is in the bank. >> exactly. and your money in the bank has fdic protection up to $250,000 per account, per depositor. so if you've got a joint account, that's $500,000. so the answer is yes. your money is safe in the bank. and that's not something that you have to worry as long as you're playing by the limits. >> right. and that's important to, you know, to point out. >> to point out. >> there is a limit. it's not limitless. it's not limitless. ty, you have a question? >> we promised to pose this one to kenny, and i'm going to -- here it comes. shahid, "do you think this will cause another financial meltdown that will result in the dow dropping more than 80 points in a single trading day?" and i assume he is assuming that we go over the debt limit, we break that barrier. >> right. and again, it almost goes to the

same question the other gentleman proposed out in california, is that you would have a swift and violent reaction partly because the system is so automated now that the reactions happen in milliseconds. before you know it, the market could be down 110 points and then you flip your eyes again and it's down to 200. that being said, i think that large asset managers and people that are in this industry have been talking about this long enough that they understand and that given an event like that, money that needs to be put to work, large as it measures, they're going to be standing there at certain levels on the way down. you know, kind of taking advantage in the event that that happens. and so i think what you'll see is the market have a swift reaction stabilize it and start to move forward again. once that conversation comes to light and people get -- people start talking about fixing that problem. >> the other part of it -- the other part of it is, if we do get a swift reaction to the downside, where is that money going to go? the flip side is, it will probably go into the bond market for safety, which michael would

make interest rates go down. >> right. yeah, hopefully. but with this debt ceiling, if we hit that -- and i don't really have much confidence in congress right now. the government's been shut down. if we hit that, i think that would drive them up. so it could be a perfect storm of two bad things happening. stocks down. >> right. right. >> what's interesting, sue, is that there will be some money coming out of the market, but as you and i know, for every seller, there's a buyer. there are people that are taking advantage of that dislocation. and so they are putting money to work. and i think that gets lost sometimes in this conversation. >> but i think it's important for retirees to know and to point out that there have been studies out there that show if you look at what happened to the s&p the last time in 2011 as this person asked, we saw the s&p down 17%. so if this happens, we could see a significant impact on retirement funds. in one study that was just out yesterday said we could lose as much as $2 trillion, 20% in retirement funds, 401(k)s,

i.r.a.s, so it is a scary proposition. i think people need to be aware and they need to let congress know they are aware of what is at stake here. >> those soon-to-be retirees need to be careful. in 2008 there were a lot of people ready to retiree who had a big chunk of their money in equities. you don't want to be that person. >> you don't want to be the last one out the door. you want to be the first. let's go back to the tick tock diner and marie chen from hawthorne, new jersey, has a question for us. marie? >> hi. how are you? i was just wondering how the government shutdown would possibly affect my health care benefits because there's so much misinformation out there. it's very confusing, and i get worried about that. >> do you want to take that? >> well, i think it depends on where you're getting your health care benefits. if you're getting them from your employer, you should be fine. and i would think across the board, are you agreeing with me on this? that you should be fine. it should not affect your health care benefits. but if you are concerned, pick up the phone.

call the provider of your benefits and get a sanity check. >> all right. we're going to take a quick break. and then more questions. a question coming up from dawn armstrong. those with a sizeable 401(k) and less than ten years to retirement, we were just talking about it, how best to protect the value of that 401(k)? answers on the other side of the break. i am today by luck. i put in the hours and built a strong reputation in the industry. i set goals and worked hard to meet them. i've made my success happen. so when it comes to my investments, i'm supposed to just hand it over to a broker and back away? that's not gonna happen. avo: when you work with a schwab financial consultant, you'll get the guidance you need with the control you want. talk to us today.

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there's the dow, as you see, a powerful rally here, partly driven obviously by short covering. up back above 15,000 at 15,030. the nasdaq which has had a notably rugged stretch here is up 70 points, almost 2%. the s&p 500 up 26. that's about 1.3% at 1,683. sue? >> dawn armstrong wrote in and says "with those with a sizeable 401(k) and less than ten years to retirement, how does one best protect the current value of the 401(k)?" jean, that goes to the investment mix. >> absolutely. the closer you get to retirement, the more you want to put your money in safer places. now, you have to keep in mind, retirement is going to be 30 years. this does not mean pull your money out of the market completely. it's just a decreasing share of your money.

>> the problem, though, has been the lack of yield. you know, where do you put your money to get a decent yield? let me go out to liz. you know, what about the reach for yield, liz, and whether or not people are taking too much risk because they go into dividend-paying stocks or something like that rather than something that perhaps is a little safer but doesn't yield as much? >> well, as jean mentioned, what you really need to do is have a big chunk of that portfolio still in stocks regardless of where you are in retirement. the financial planners i talk to are talking about 40 or 50%. so if some of those stocks are dividend-yielding stocks, you'll be fine. what you're going to have trouble with is if you're trying to take your safe money and put it in increasingly risky assets. this is a lot for the individual to deal with, which is why i say if you're ten years out from retirement, you should be talking to a fee-only financial planner. somebody who's compensated only by fees from you because you don't know what you don't know. and this is a time in your life when you can make a mistake and

never recover from it. we talked about retiring into a bear market. people who do that have a much higher risk of running out of money. >> sharon, let me turn to you and anybody else on the panel, you know, when we say as you get closer to retirement, ten years, five years, you should transition to, quote, safer assets. that typically means fixed income. that typically means bonds. >> right. >> in this environment, as interest rates are rising, the value of those bonds goes down, and most of those bonds are held not as individual investments, individual bonds, but in 401(k)s, in bond funds. the share value of those bond funds, sharon, goes down as interest rates rise. >> exactly. >> that's what they've been doing this year. >> exactly. >> that's what a lot of people fear if we go over the debt limit and get a credit downgrade that interest rates will go up. >> and a lot of folks are very scared by that. first of all, if you're ten years away from retirement in a

401(k), you may have likely had several jobs. all of your money should not be in that 401(k) if you are able to roll it into an i.r.a. from previous employers, do that because you'll have more flexibility in what you can invest in. if you have any old 401(k) money, make sure it's in an r.a. when you get that controlled, do exactly what liz said, talk to a certified financial planner, a financial adviser who can help you with the different types of investments. what they are likely to tell you for your fixed-income portion is to look at high-yield bonds as well. and to look at perhaps municipal bonds. and that vanilla bond fund that you may be in in your 401(k) may not be best for you. it's uncertain. but talking to a financial adviser is really going to be the key. >> and when you get to retirement, you're going to want to look at creating an income stream to replace that income stream. a lot of people are looking at immediate annuities these days which are low-cost, very simple, not the high-fee watch-out annuity. >> it's not your father's annuity. >> and as interest rates go up

and as you age, it makes sense to ladder into those very much the same way you would have laddered into a bond portfolio just to keep your income stream growing. >> yeah. ty, you got a question? >> well, let's go to james b. adams asks this. on h "i'm 30. do you think the shutdown is a buying opportunity for me? good for him, $50,000 in an old 401(k). i need to decide how to invest." liz, why don't you take it and then i'll come to kenny. liz, is it a buying opportunity? >> it absolutely could be. we don't know what's going to happen going forward. if you're talking about a 401(k), that's retirement investing. you're talking about decades in the future. the ins and outs right now don't matter so much. if i had that money, i'd get it invested. you never know what's going to happen next. >> kenny, this goes back to what you were saying a half hour ago. it could be an opportunity. >> if you're 30 years old and he's got money he's trying to decide what to do with, i think it's absolutely an opportunity because as all the guests have

said, retirement money and especially at 30, he's got 20 or 25 years or 30 years out before he's even worried about it. so he absolutely -- it doesn't mean you're necessarily taking it on today and put it all in the market. you can still be strategic with it, but you should absolutely be looking at this as an opportunity. >> michael, you said you think this is a buying opportunity in real estate. why? >> first, if he's renting, i'd buy a house because he can detukt his interest on mortgage and property taxes and he has a place to live of his own and build equity. with rates going up, it's pushed off people who wanted to buy who maybe don't have the historical perspective that lates are still historically low. now that people can't close on a mortgage, you'll start to see values come down. and if rates continue to go up, they'll go down even more. i'd be looking to buy something if he needs it. >> also if you do have a qualified buyer, basically it might be a motivating factor for the seller, correct? >> totally because you're going to -- we're seeing that probably 40% of our buyers can't close now.

because of what's -- >> 40%? >> roughly. because of the government -- because we can't get social security checks from social security. we can't get their income verified from the irs so they can't close. not every loan requires that. some do and some don't. so some people, they should go to their bank, see if they qualify now with the shutdown. and if they can, not right away but start looking for the house they really like. >> and use that as a negotiating tool. >> yeah, and that's a down payment. >> kenny wants to tie up a point before we go to a break. >> but correct me if i'm wrong, if that's 401(k) money, he cannot use that as a down payment on a house. and so therefore, he should be buying a house anyway if he can afford to do it for all the reasons you suggested. >> you can borrow against it. >> he could borrow against it as a down payment? >> yeah. oh, yeah. he could borrow against it. not all of it but a portion of it. he could borrow against to put towards a down payment. he could put down 5%. >> i don't know. >> we don't like that idea. >> if he pays interest to himself -- >> no. >> no. >> i'm outnumbered, i guess. >> the ladies are saying no.

>> if it's his job, he'll have to pay it back inside of six months. >> it's an old 401(k). >> i'd say that money should be in an i.r.a. >> i give up. >> you can't even go buy a house without putting down a minimum of 20%. >> if it's a conforming loan, you can put down 5%. if it's a fannie or freddie loan, you can. >> i realize you can, but it in my mind it doesn't make sense. >> don't worry, michael. >> if it appreciates, it makes sense. >> indeed. >> stepped into an interesting area there. i just want to also point out where the dow is sitting right now. we're sitting with 231-point gain. the s&p up 27. nasdaq up 72. an awful lot of the stocks, kenny, that -- we're going to go to a break here -- that have been hurt the most this week have come back the most as you might expect today. an awful lot of the biotechs have been really rip roaring today. when we come back, the government shutdown, of course, having a real impact on real people. mary thompson is in portland, maine. mary?

>> reporter: hey there, tyler. you know, maine is known as vacation land. but these days it's no vacation for a number of small businesses that find a critical source of funding that's been shut down or shut off because the government is shut down. i'll have that story coming up after the break. [ banker ] sydney needed some financial guidance so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today... and tomorrow. so let's see what we can do about that... remodel. motorcycle. [ female announcer ] some questions take more than a bank. they take a banker. make a my financial priorities appointment today. because when people talk, great things happen.

welcome back to "power lunch" as we enter day ten of the government shutdown, all 50 states are starting to feel the effects. in fact, maine is ranked by walthorpe as the fifth most state impacted. mary thompson is in portland, maine, with some of the reasons why. you've been talking to a lot of small business owners, mary. >> reporter: i certainly have, sue. the survey used a number of factors to determine a state's ranking including the number of federal workers, the number of federal contracts a state might have. even the number of national parks that might be impacted by the shutdown. now, maine ranks high on the list because its largest city, portland, an above-average 4% plus of the population depends on federal contracts for income. mayor michael brennan telling cnbc the shutdown's impact has been minimal so far but will grow the longer it goes on. still some of the city's small

businesses like the three-year-old rising tide brewery feeling it already. owner heather sanborn saying a planned expansion growing more costly because the brewery can't get a loan from the small business administration. >> we were hoping to use an sba program that would have been very inexpensive because of some new rules about waiving guarantee fees, and we're not going to be able to use the sba, i don't think, because time is reallying of the essence. >> reporter: now, 2 1/2 north near acaacadia national park. maine's housing recovery is hindered by some buyers to get the rural development loans they need. here's agent john hatcher. >> it has all the major mechanical electrical plumbing systems you would need in an energy-efficient home. and the idea is that this one day could be mass manufactured, shipped anywhere around the

country and any homeowner could integrate it into a custom home they built themselves. >> reporter: okay, that wasn't there hatcher, of course, but again his business, he says 5% to 7% of potential buyers are being impacted because they can't get those rural development loans. the governor declaring a civil state of emergency. what this means is we are likely to see more federal workers in the state laid off temporarily. sue, back to you. >> mary, thank you very much. i think that sound bite was actually from a package that diana olick put together for us. but now you know all about energy-efficient homes. let's talk a little about the impact this is having on the states, guys, because you know, jean, i also worry just the confidence issue, you know, that the way that confidence is being impacted. when it's not just the federal government, but, you know, it's your local town and the inability of them to pay their workers. and it has such a trickle-down effect. >> absolutely. you're seeing it in the retail sales numbers, softer retail

sales, not great expectations as we head into the holiday shopping season. and a lot of retailers going to great lengths to try to bring people in early. so they can grab their share of that money. >> yeah. you know, liz, i also worry that if, indeed, they do get a deal done to extend that debt deadline, that will put it right after thanksgiving, about. which is the holiday shopping season? and we're going to be revisiting these issues all over again because they will not have solved the debt ceiling crisis overall. they've just basically put a band-aid on it. so what's the trickle-down impact, do you think? >> well, uncertainty is really bad. it's bad for retail. it's bad for consumers. they don't know what to do next. and the instinct is to pull back, to not spend, to not go all out. and there are a lot of families who are living paycheck to paycheck. when you disrupt that with a furlough or some sort of, you know, down the stream impact, they are much more likely to just hole up like a turtle. and they don't want to spend. and they don't want to come out

of their shell because they don't know what's going to happen next. i could see this having a really big impact, not just on the christmas shopping season, but into the next year. >> mm-hmm. michael, you wanted to add to that? >> well, look at the questions people are asking. they're worried about their health care, 401(k), retirement, future, everything they've saved. they're not going to buy a new house or second home or bigger home. so the housing sector will get hit pretty bad. this with rising rates, it's going to be tough. >> the other factor that people are really worried about we haven't talked about even though we know it's happening with the shutdown is their jobs. when you are in this situation, job security, along with consumer confidence, is a big problem. and so what people need to do is focus on what they do have. and if they're fortunate enough to be working and have a job, they really need to hang on to that job because we don't know what hiring's going to be like if we get into a significant crisis point. >> and if you're stable, save while you can. >> very good point. >> we're going to take a quick break. when we come back, we're going

to ask and answer the question, is the u.s. at the risk of a credit downgrade from the credit agencies? no matter what happens? we'll be right back.

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dow jones industrial average holding on to the lion's share of a very significant advance. on the back of what we think is a break in the budget impasse on capitol hill. s&p 500 is up 1 2/3%. and the nasdaq is up almost 2% after a very rough week. ty? let's take a look at the yahoo! finance question of the day on day ten of the government shutdown and six days until the u.s. hits its debt limit. so what's worrying you most about your money right now? 29% say my 401(k). 9% say savings in my bank. 41% say my stock and bond portfolio. and 21% say my own debt. kenny, i guess people are

worried about their stocks and bonds. but by extension, their 401(k) 1 basically saying the same thing. >> and rightly so because it goes to the general fear across the population of people not understanding what's going on, what does this mean to them, how is this going to affect me? and we've just lived through this five-year financial crisis where every member of this panel has already said that people have watched as they get decimated back in 2008, '09 and '10, they lost almost 50% of their portfolios. >> and that wasn't the first time. back in 2001, if you've been investing over the past 20 years, you have been hit hard, whacked hard, at least twice. >> wriright. and i think these results and these questions go right to that fear. >> you know, one out of five people are telling us that they're very concerned about their own debt. well, that is something you can control. you have no control about what's going on in washington, but you can control what you owe. and so if it comes down to an adjustable rate mortgage, if you want to make an extra payment there, just to the principal.

make sure you're paying that down. or if you want to definitely pay off that credit card debt and don't carry a balance because we'll see those rates go up, too. these are things you can control. while we're so anxious about washington and so frustrated, there is something that you have that you need to be doing, and that is paying down that debt. >> one of the things with he did get questions on yesterday that we were going to talk about later, but this is the perfect segue, jean, and that is if you're furloughed and you have a mortgage or a car loan and it's not your fault that you can't pay that debt, but you can't pay that debt, what do you do? >> you pick up the phone and you call your lender, and you say, this is my situation. and as we saw over the past number of years, lenders will work with you. but they are less likely to do that if you don't tell them what's going on. so by all means, ask for some relief. maybe they'll give you a break until you can get back on your feet. and you want to assure it doesn't hit your credit report if at all possible.

>> i would write a letter and cc your congressman and let them know the situation you're in and get it on record right away. the sooner, the better, like you said. >> christian said, "with all these issues in the federal government in place, is the u.s. at risk of a downgrade from the big three credit agencies? if we are, how will this affect the stock and the bond market?" that was the worry the last time around, kenny, when we did get the downgrade. is the market somewhat immune to a downgrade? because when it did happen, we actually saw interest rates go down against everybody's, you know, everybody thought they were going to go up. they went down instead. so has the market factored that in? >> i don't think completely. the market did take a hit initially, right? and then it stabilized and it rebounded. and in fact, then we moved to all-time highs, actually, right up until early september when we hit 1725. in fact, i don't think that the market's immune to it, nor do i think it's priced in, but i think you have to believe that

if we -- even if we don't go over the debt limit, the fact that we've had all this antics going on, it wouldn't be surprising for the credit ratings to say listen, you guys can't get together at all and we're nervous about that so therefore we need to send the message home that somebody's got to get their act together. >> do you agree? >> absolutely. >> all right. we're taking your calls and your -- not your calls, your questions on twitter and on facebook. so send those into us. we are holding on to the advances in the dow jones industrial average. we'll update you on the markets when we come back and get more expert advice for you on a special edition of "power lunch." [ female announcer ] it's time for the annual shareholders meeting.

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welcome back. we're talking about protecting your money now. bob pisani, today's point gains are explosive, but the volume is not. >> yes. >> what does that tell you? >> well, yesterday we saw people outright doing what we call degrossing, taking down their positions. we saw, for example, facebook did 40 million shares in the

first half hour yesterday. it normally does 60 million in the whole day. those are guys outright lightening up their positions. today we don't have that as much. people are still a little cautious about getting back in. so the markets are up on a little bit lighter volume. but you can't complain. >> but this is not a flood of money into the market today. >> no. but it's about as broad a rally as you're going to see. 90% of the stocks are on the upside. 90% of the volume is on the upside. that's a fairly rare occurrence. no matter where you go, you can't throw a rock without hitting stocks up 2%. big cap, midcap, small caps are up. put up the sectors. no matter where you throw a rock, financials, industrials, materials, see what i mean? everything's up essentially about 2%. and even in the international groups, kenny, india, russia, thailand, these are exchange-traded funds. they trade right here. and remember, these -- most part, these sectors are not trading right now in their home countries. particularly not in russia. people are just making estimates about what the market's going to look like. and you can see they're all up

dramatically. >> don't you think the market's ahead of itself? i mean, there is no deal in place. they haven't met with the president. and according to some nbc news sources, there is nothing in this bill that addresses the funding or reopening of the government. >> yes. >> which was the president's basic sticking point, that if they don't reopen the government, he's not going to negotiate. so to me, it seems like this market is assuming -- it's priced for perfection on this particular -- >> be ready for volatility. >> exactly. >> violent volatility. that would be my takeaway. >> we've come down 5% off the highs. so a 2% rally doesn't bring us back to where we used to be. i agree. >> right. >> without the continuing resolution, it is a little bit worrisome because even with people paid and partly called back, it is going to be in effect. and once this is over, we're going to tally it up. we're going to see the influence on the gdp. >> this feels like a market that's captive to headlines to me.

one more question before we have to take a forced break. it comes from author ace and i'm going to direct it to liz. "the biggest thing people hear is when rates rise, the price of bonds go down." we talked about it a minute ago. if you're an income-focused investors, liz, who holds bonds to maturity, is this a problem for you in >> well, that's the thing. if you have a bond and you're going to hold it to maturity, you kind of don't care what happens to the price, right? you're just living off the interest. you just hold your breath and march to it. i think most people aren't in that fortunate position. >> kenny, you're nodding. >> i think she's right. if you're going to hold it till maturity and collect on it, i think there's absolutely no reason to be concerned about it at all. but like she said, if you're not in that position, then yes, i think you need to be able to be concerned. but that wasn't the question. the question was, if i hold it till maturity, am i safe? and yes, is he safe. >> we're going to stitch in a quick break here and come back and talk a little bit more about protecting your money now. we'll be right back. e of your future.

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welcome back. in the minute and a half that we have left, we want to get everybody's final thoughts as we wrap up this special edition of "power lunch." jean? >> it's all about you. you've got to know who you are and where you're going, otherwise you're not going to get there. >> very good point. >> make sure you have cash on

hand because one thing you can control is that savings. that emergency reserve, we may be in the midst of an emergency. you may need it. so figure out what you can cut out. do that and put that money toward your cash savings. >> if you're financially secure and you need to buy a house and want to, it's a good opportunity to buy. >> down to you guys. >> liz, what's your final word? >> don't panic, but call your congresspeople, tell them to do their jobs. >> kenny? >> i agree with -- i think all the comments are exactly right. i think people should not -- the last thing they should do is not panic and ride it out and understand where they are. >> can we look at the markets once again before we leave? we're up 242 on the dow jones industrial average. the s&p is up about 28. and the nasdaq is coming back nicely. but, of course, it's had had a very tough week. on the interest rate front, we need to note that rick santelli gave an "a" to the auction today. but that's the 30-year. and the reason it got an "a" is because everybody feels good about the next 30 years. they don't feel so good about

the next few weeks. so shorter-term interest rates have been moving up. longer-term interest rates have been going down. >> and that has been the symptom all week. >> thank you all so very much. >> that has been the symptom all week. thanks, folks. we hope you enjoyed it at home. that does it for "power lunch." >> "street signs" begins right now. we'll see you tomorrow. and you are looking at live pictures of the white house where senate democrats, all 50 of them, plus of them, really, are heading to meet with the president. cnbc cameras are watching every move. there you go, folks. a lot going on right now in d.c. well, let's make a deal. stocks soaring as the gop gets set to put a short-term debt offer on the table. but is this just a good old-passioned, you know, can kicking that you need to sell? we're going to have your playbook ahead. the default risk to housing. what could really happen if rates spike? plus, the head of one of america's hottest biotechs tells us why he is up more than 250%