Recapping the day's news and newsmakers through the lens of CNBC.
Notes:
The stock market has shrugged off the government's partial shutdown, and many Americans apparently feel they can live without the 800,000 federal workers moved to the sidelines. But if you're shopping for a mortgage, you could find yourself shut out over the most prosaic issues: the need for verification of your Social Security number and tax return. And federal workers, even if still working, won't be able to prove their employment, a necessity for any loan.
A freeze on mortgage applications could mean some homebuyers won't get the home they want, and that some borrowers may miss out on today's low loan rates. A slowdown in home sales won't be good for the economy, either.
Quotes:
"What could happen is that our customers could be put in a hold status and then subject to interest rate gyrations that are very likely to occur between the time a government shuts down and reopens.
—David Zugheri of Envoy Mortgage.
"Some home-buying consumers are reluctant to buy because of the uncertainty. ... People are not especially comfortable making the biggest investment of their life when the government seems to be unable to solve important problems."
—Brad Hunter, chief economist at Metrostudy
Buy low, sell high. Got it?
Notes:
How do successful investors make money? Many ways, but often by keeping their heads while others lose theirs. Berkshire Hathaway will show a tidy $2.15 billion profit for betting on Goldman Sachs in the depths of the financial crisis in 2008, when most investors shunned hard-hit Wall Street firms.
As of today, Warren Buffett's Berkshire has the right to convert warrants bought back then into shares, making the investment firm the bank's sixth largest outside investor.
Are earnings poised to disappoint? Quite possibly
Notes:
Now that we've started the fourth quarter, we'll soon get the report card for the third, and chances of an "A" look dim. In fact, corporate profits appear on track to come in at about a third of what analysts had expected at the start of the year, with S&P 500 earnings projected at about 3.5 percent. Moreover, downward revisions of the previous two quarters' results are the highest in more than 10 years.
Quotes:
"Common headwinds include a pickup in interest rates during the second half of the quarter, a resulting strengthening in the value of the U.S. dollar, an increase in oil prices following the flare up of tensions with Syria, as well as a weaker-than-expected increase in [second-quarter GDP] as a result of the unresolved sequestration."
—Sam Stovall, S&P Capital IQ's chief equity strategist
Hey, have I got a deal for you ...
If you have any role in your organization's pension plan, you've probably heard consultants boast of the wonders they can do for returns. Well, take it with a grain of salt.
A new University of Oxford study shows that professional investment advice given to the $13 trillion pension industry is "worthless." Though the consulting industry earns enormous fees, the study, looking at performance from 1999 through 2011, found that instead of beating the market the average, consultant's recommendations trailed benchmarks by 1 percent.
How do they get away with it? Easy: Most pension plans don't bother to look at the consultant's track record.
Quotes:
"It's a waste of money listening to consultants. It's a service that is useless."
—study co-author Howard Jones
What I said is not what I meant
The JPMorgan Chase plot keeps getting thicker – and juicier – with a new report that the government has a confidential informant feeding investigators from inside. A wealth of documents support the government's view the investment bank deliberately underplayed the risks of mortgage securities sold before the financial crisis, according to The Wall Street Journal. JPMorgan is trying to settle the case, but talks are dragging on over allocation of blame.
