The U.S. stock market was closed on Monday this week due to the Labor Day holiday. But when it opened on Tuesday major indexes tumbled by more than 1% in a single trading session. The Dow Jones industrial average fell by 234 points, posting its worst day since August 17. Financial stocks saw their steepest decline since earlier this year in May.

One of the issues that spooked the markets was North Korea successfully testing a hydrogen bomb that can be equipped onto an intercontinental ballistic missile (ICBM.) This is essentially a guided ballistic missile with a minimum range of 5,500 kilometers (or 3,400 miles.) Instead of using the missile to deliver nuclear weapons, an ICBM can also be mounted with conventional, chemical, and biological weapons that have varying effectiveness. Most modern designs support multiple independently targetable reentry vehicles (MIRVs), allowing a single missile to carry several warheads, each of which can strike a different target. This latest test was North Korea’s sixth nuclear experiment since 2006, and it’s troubling because its the most powerful one yet. As tension between the U.S. and North Korea heats up it understandable that investors are starting to worry about their assets.

The wrath of mother nature is another major concern for U.S. investors. Hurricane Harvey already caused billions of dollars worth of damage to Texas. As oil refineries on the U.S. golf coast start operating again, the oil markets responded with a bullish outlook. U.S. crude prices rose more than 2% on Tuesday, with a 3 week closing high of around $49 per barrel. After making landfall Harvey disrupted about 20 to 25 percent of U.S. refining capacity. But much of that is in recovery this week. Most of the record setting destruction from this storm has already happened. But there’s another hurricane called Irma which is re-raising concerns about the demand for fuel. Irma is a category 5 hurricane, with winds of 160 miles per hour.

One of the largest coastlines expected to be hit by Irma is in Florida. Unfortunately an analysis conducted by the Associated Press reveals that there is a “steep drop in flood insurance across the state, including the areas most endangered by what could be a devastating storm surge. In just five years, the state’s total number of federal flood insurance policies has fallen by 15%. Florida’s property owners still buy far more federal flood insurance than any other state with some 1.7 million policies, covering about $42 billion in assets.” However, most residents in hazard zones are not properly covered. Florida has 1,350 miles of coastline, the most in the continental United States. And based on Federal Emergency Management Agency data, “Florida has roughly 2.5 million homes in hazard zones, more than three times that of any other state. And yet, across Florida’s 38 coastal counties, just 42% of these homes are covered.”

This is why the 10 year yield on U.S. government bonds have fallen to below 2.1%, a key level to measure investor’s confidence in the economy. In general insurance company stocks are down quite a bit. Berkshire Hathaway (NYSE:BRK.B) stock fell by more than 2% on Tuesday. Its insurance subsidiary, GEICO, covers about 10% of the vehicles in the area affected by hurricane Harvey. We still don’t know how much damage Irma will cause. Authorities in Florida have only begun bracing for the arrival of Irma as it churns toward the US, which could hit as early as this weekend. On the other hand, investors seem to be bullish in putting their money into companies that may perform well during the recovery of natural disasters such as Wal-Mart and Home Depot. Timing the markets usually doesn’t work, but that doesn’t seem to stop some investors from trying.

This author does not have any shares in BRK.B and does not plan to own any within 72 hours of this post.

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