Gentleman, the legendary investor john paulson, only on power lunch today. Sue is at the new york stock exchange. Hi, stew. Ty hi ty, great to see you. All throughout our show the five browns, the famous players, theyre playing steinways for us at the famous steinway factory. Listen to that. Isnt that beautiful. The ceo of the company is on with us because john paulson just bought this company and theyre going to play for us throughout the hour. Five browns, welcome to power lunch. When you think of the federal government these days, what music comes to mind . Lets listen to what they come up with. A circus theme, thats appropriate for whats going on in washington. The five browns will be with us throughout the hour, picking different types of music as the stories warrant. On day eight of the federal shutdown, president obama will make a statement and answer questions in one hour. We will, of course, carry that live here on cnbc. All of this as we approach that october 17th deadline. Steve liesman will show us the map behind what will be paid for and not. First to eamon javers with a scary new report from Goldman Sachs on what that debt ceiling deadline means to me and you. Thats right, sue. They are not hitting all the right notes in washington according to Goldman Sachs. Take a look at some numbers they put out overnight last night. In their estimation now of what happens if we breach the debt limit, it could be a fiscal pullback between 75 and 175 billion. That is an estimate of all of the demand that will be sucked out of the economy. They say it could result in a meaningfully negative effect on Economic Activity if not addressed quickly. Compare in your mind that 75 to 175 billion to what we were talking about with the end of qe at 85 billion a month and we were talking about markets reacting to just tapering to 85 billion, scaling that back a little bit. This would be potentially removing 75 to 175 billion out of the economy. How would this all actually work . The Treasury Department has said that the deadline is october 17th here and so you can see what weve got is a list of all the different outlays that are prescheduled through the rest of the month and you can see on october 23rd, the big one is going to be a 12 billion payment there. The treasury has said after the 17th theyll have about 30 billion. It looks like they could probably make that 12 billion payment. Look at november 1st. Thats when they have 67 billion in payments that are due and thats everything from Social Security benefits, Medicare Advantage and part d plans, active duty military pay, civil service, military retirees, veterans benefit payments and supplemental security income all of that due november 1st. We dont know what inflows will to be treasury but we can say what the outlays are going to be and that november 1st date is going to be tricky to make all the payments if they dont have the debt ceiling raised by then. Sue and tyler. Eamon, thank you very much. Breaking news from the bond market right now. The threeyear note went up for auction. The auctions this week are incredibly important because of whats going on in washington. Not that we dont always Pay Attention to them but the tensions are higher this week. Well, absolutely. Especially when we saw 35 basis points on a one month bill that two weeks ago was 1. 5 bases point. Highest yield on one month bill going back to october 28th of 2007. All this is very important. On this auction, 30 billion, three years, i give it a cminus. The wi was like a stair caste, kept rising all day for all the issues sue outlined. Auction cminus it tailed a bit. Wi which i talked about rising most of our time zone was at 72, priced at 71 basis points, a bit of a tail there, and the bid to cover at 3. 05, 3. 05, chasing every dollar worth of security available, below 3. 35 ten auxion average. Heavy on indirects which is interesting and made sense at 34. 4 and directs on the screws at 19. 7. All in all it wasnt a bad auction considering the question mark from a chronological or staff point plaguing Money Advisors and short bill auctions. Back to you. Thank you very much, rick santelli. Eamon went through some of the numbers about what the outflows from the treasury would be, sort of day by day, the question for you, steve, is who gets paid and who wouldnt if we breach that debt limit. This is a very serious situation. Dont want to make too much fun of this but we created the debt ceiling play at home game. Tyler, i want you to play. We call it hard choices. The debt ceiling play at home game. Theres only one rule, for every 3 youre required to spend by congress in this case, you have to eliminate about 1. Thats the debt, what you cannot you cannot borrow so you cannot pay it even though youre mandated to pay it. Lets do a practice round, scenario number one. You can pay for Social Security, 49 billion, and medicaid of 69 billion for a total of 118 billion. Remember the rule, eliminate a third, thats getting rid of 35. You have to get rid of food stamps and unemployment, military pay and retirement, veterans benefits, about 34, 35 billion. Thats how you play the game if you will be the secretary of the treasury or the president in this case. You pay this. Right. Thats your total obligation. Right. Is 118 billion. You dont have that kind of money. You have to all of this goes away. That goes away. All of this. This is easy. Lets show you the next part thats hard here. Put the serious stuff in there. If you pay Social Security, medicare, medicaid, interest on the debt, defense venders, food stamps, unemployment, military, the thing that will not get you thrown out of office, 211, get rid of 68 billion, play it at home. Lets get rid of the department of justice, fbi and courts are gone, rid of all federal salaries for 24 billion, shut down the faa the planes 15 billion, thats how you get 68 billion out. Heres great part of this story, tyler. We did this. Were not sure its legal. Rightp. There are constitutional scholars arguing if the congress appropriated it, can the president actually choose not to pay it. One thing or another. The treasury secretary says we dont really have that ability. We have no authority from congress. To be fair, congress some republicans in Congress Want to pass a prioritization law, pay all this good stuff over here and dont pay some of this over here. Its a series of hard choices if we hit the debt ceiling, were wired now to pay Something Like 3. 5 trillion in spending an we only get 2. 5 in revenue. A third has to go away. Go away. If we dont authorize further borrowing. Thank you very much. Sue, down to you. Houston, we have a problem as steve illustrated. All right. So if we do hit that debt limit whats an investor to do. Advice from kenny on stocks, Sharon Epperson on commodities and jeff kill berg on the bond market. Kenny you go first. I think you have to be listen, weve seen it. The market is getting weaker. People are expecting that to happen. I also think were going to go to the edge and then people will come to their senses and were not going over the ceiling. If we arent this is a great opportunity. If we go over theres going to be more pressure on the market, you have to be patient and dont panic. The last thing that investors should do is start running for the doors and throwing everything out. Thats the wrong thing to dop. Thats typically when the Retail Investor panics and makes the wrong decision always. Sit tight. Sit tight and you should add on on the weakness. Once its done, you knonoknow, will move higher. Those i talk to on the floor think were not going to see a default but if it happens and negative for stocks people will want to sell everything and that includes commodities. Even though you may think gold may be the safe haven play it hasnt shown that this year not with the shoutedown were seeing, not with syria. It hasnt reacted as many expected it to, down 20 for the gld. You may not want to be aggressively in gold as that safe haven. Instead, bill kneale at logic adviser, some may want to take an Options Strategy in the gold market to protect from volatility. Silver is a volatile place. That may not be the place to be either. In terms of other commodities, in terms of oil and copper, dollar denominated commodities, if the dollar falls had they should do well. You may want to protect yourself there as well and get other types of commodities the yen to offset what may happen to the dollar and what may happen to the commodities. Back to you. Sharon, thank you. Out to chicago, jeff killberg. What do you do in the bond market . Still like owning treasuries. Its very interesting. Once we saw the 3 get rejected in the ten year, weve been buyers, still buyers. Obviously we are seeing this default situation. Its not a willing default. 535 knuckleheads in washington fighting playing the worst game of chicken ever. We think you can still own these treasuries here because on the tenyear note watch it go down to 242. Saw in august 2011 we saw this counterintuitive trade. Where are folks going to go. Theyre not going to sell treasuries. If we see equities come off like kenny my buddy said, we will see a deeper dive into treasuries. Jeff, thank you so much. Ty, up to you. Thank you very much, sue. Republicans and democrats are obviously having problems rising above our wealth editor found one business person setting an example. Robert, give us this nice news we need it. This is really good news. Like many of the wealthy, billionaire john is fed up with washington and doing something about it. Arnold the 39yearold Hedge Fund Manager pledged up to 10 million to Fund Head Start programs closed because of the shutdown. Now the money will help reopen seven head start programs in six states. Arnold said the shutdown has caused severe disruptions in the lives of many low income americans and we believe it is unfair that Young Children from underprivileged communities and working families have to pay the price for the legislatures collective failures. This money only enough to fund the programs through the end of the month. The government has to get it together since the private money cannot replace government commitments. Hes not asking other wealthy people to follow but maybe this could lead to more gifts to fund what the government is not. Thank you very much. Interesting idea from that individual. Sue, going down to you. Ill take it, it ty, generous idea from that individual. Were calling it glitch gate. Problems with the obama care exchanges persist unfortunately. A website developer gives the three most important fixes. Plus, should health and Human Services secretary Kathleen Sebelius be fired over the mess . Well talk about that. She isnt talking to us but did talk to jon stewart on Comedy Central last night and he really went at her. Well have that for you. Hedge fund titan john paulson is passionate about pianos, steinways in particular. He bought the piano maker steinway. The ceo joins us with the talented family called the five browns and they will take us out to commercial break. Whats in your ear . Oooo a quarter check for more well, i guess i can double check. My watch [ male announcer ] it pays to double check, with state farm. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. That is the five browns. They are playing live at the steinway and sons studios in queens, new yorkp. This is a family of five siblings and they were all admitted to the julie yard school of music at one time. The first time thats ever happened. They play beautifully. Their first three cds went to the top of billboards classical musical chart at number one. Beautiful music. Wow. That is really an impressive sight. Talk about impressive obama care and damage control. Jon stewart tore into u. S. Health and Human Services secretary Kathleen Sebelius on the daily show last night over the exchange glitches. Take a listen. Nice to see you. Were going to do a challenge. Im going to try and download every movie ever made and youre going to try to sign up for obama care and well see which happens first. Okay. How many have signed up thus far . Fully enrolled i cant tell you because i dont know. Lets just say it was not a pretty sight there with mr. Stewart, who can be very clever. Now exactly what did go wrong and how big of an issue is it to fix . Joining us is john wet early, developer with oria solutions. John, welcome to power lunch. So what went wrong here . Thank you. Whats been happening . Well, it seems like people have been having a lot of issues signing on to the site, even accesses the site at all. As you can see now we have the site up here. Over the past couple days its definitely gotten a lot better. But were still having some errors. I created a login earlier today and still getting errors as you can see. You were able to log in to establish an account or not . I was. You were . Because i tried last week and i wasnt, but admittingly that was last week. Are the problems that arose here, obviously partly programming, but were they mostly driven by volume and couldnt you have tested against the volumes that they experienced . Well, i mean you can assume that. Its kind of hard to tell. With a site thats getting traffic like this, one would hope that they would test up to, you know, a very large volume. But they were only expecting 50 to 60,000 people and on day one 250,000 people tried to sign up at once. It feels to me like they should have gone back to the colin powell doctrine when asked about how many troops you need, take the number you need and triple it, so if you took the number of people you expected and then you tripled or quintupled it maybe you would have found out what the problems were. Now let me transition here. If this was a client in the private sector, what would have happened here . Would the company that designed the software be fired immediately . Who would have taken the hit here . Well, it kind of depends. I suspect that with a website like this, you cant really fire the people right away, just because its such a large endeavor, theres so much time and money already invested in this one website, to bring in a whole new crowd of people to fix it, you know, theres a whole ramp up time. It would its kind of you cant really ask you have to dance with the girl that brung you, i guess is what youre saying. Theyre the ones that designed it and ultimately will be able to fix it fastest down the road. Down the road there will be some consequence, i would think. Thank you very much, we appreciate it. Youre welcome. Ty, the glitches were talking about certainly make it feel as though it are a lot of losers in obama care right now, but actually that is not the case. There are some very big winners and Bertha Coombs has been following that part of the story for us. Hi. Goldman sachs today raised its rating on the urban mares with acute care Emergency Departments seeing more of their patients covered by insurance should help reduce the burden of bad debt. United healths alan miller says more insured is definitely a positive for his company. The industry in acute care runs between 12 and 20 , as you know people present themselves in the emergency room must be treated. And so many of these people have no coverage. Now they will have coverage, once they get enrolled. Yeartodate hospitals have already outperformed the market quite handsomely despite tougher reimbursement rules. Deutsch bank analyst says next year the industry should start seeing higher patient volumes and revenues. Weve done a lot of analysis around this. We think theres about 3. 5 billion of incremental revenue opportunity through the Health Care Reform that should benefit the sector. He and a number of other analysts say the higher volumes of insured patients even at lower medicaid rates should offset tougher reimbursement rules. Thanks, bertha, very much. Dominic chu has a market flash. A monster move for a major energy drink maker. Monster beverage, appears to be connected with a bmo Capital Research note. Theyre citing data that monster beverage saw sales grow by around 10 last month. Bmo has an out perform rating and a 67 price target on their shares. As you can see session highs for monster beverage. Dom, thanks. Health and Human Services secretary Kathleen Sebelius facing a lot of heat over the obama care glitches. What should she be doing right now . Is the middle class the new poor . Star of cnbcs the profit ceo of camping world, great to see him back on power lunch. Well get his take on all of that when we come back. Jackie there are plenty of things i prefer to do on my own. But when it comes to investing, i just think its better to work with someone. Someone you feel you can really partner with. Unfortunately, ive found that some Brokerage Firms dont always encourage that kind of relationship. Thats why i stopped working at the old brokerage, and started working for charles schwab. Avo what kind of Financial Consultant are you looking for . Talk to us today. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Peace of mind is important when youre running a successful business. So we provide it services you can rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. All right. Power rundown time. Confusion seems to be the hot topic today. Helping us sort out some of