Will Wildfires Trigger Another Credit Crisis?

[Click to view in browser](. Sep 11th 2020 Dear InvestingChannel Reader, Oregon, a western state with a population of approximately 4.2 million, has ordered the evacuation of 500,000 residents due to raging wildfires. While nearly 12% of Oregon's population are fleeing their homes, fires are also raging in California, Washington, Arizona, Utah, Idaho, and Colorado. In California alone, 3 million acres have burned, surprising the record set in 2008, and the fire season still has two months to go. If fire seasons are becoming more intense, the financial impact could be lasting. California's fire-fighting agency Calfire estimates that 3 million homes, or 25% of the state's 12 million homes, are at high risk of wildfires. The concern is that insurers could begin denying coverage in high-risk areas, depressing home values, and setting off a cascade of defaults that would damage banks. Recall that troubled mortgages were one of the underlying reasons for the Global Financial Crisis in 2007-2008. Maybe it is not a coincidence that real estate is the weakest sector on Wall Street Friday. Technology is the only other loser. Gains in basic materials, industrials, and financials are keeping the S&P 500 above water midday. Treasury bonds are modestly higher despite the latest inflation data (CPI) coming in a bit hotter than expected. Gold slipped, and crude oil is attempting to recoup some ground lost earlier this week. CBOE Volatility Index (.VIX) is off 1.62 to 28.09. Still, the overall tone of trading remains cautious amid economic uncertainty, upcoming elections, and ahead of a busy economic calendar Tuesday-Thursday next week, including a Federal Reserve rate announcement on Wednesday. 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