I smell a bust coming...

The title of this article says it all. The homebuilders are going to lose money this year. They will lay off hundreds of thousands of workers. The economy will tank. The Fed, knowing that employment numbers are a lagging indicator will cut rates aggressively.
Here's the real scoop on the housing numbers: after Janruary's biggest drop in new home sales in thirteen years, everyone expected a bounceback. Don't forget, February is the biggest month of the year for new home sales. That's because they are recorded differently than existing home sales. New home sales are recorded when the conctract is signed (often with a small or refundable deposit), not when the deal actually closes. Also, if someone subsequently cancels the contract, that is not recorded. In other words, not all the sales are real. The supply of new homes on the market is now at 8.1 months, and the forward rate of new homes (848,000) is 45% lower than the trailing numbers (~1,525,000). I expect that employment will be hit very quickly and brutally over the next couple of months, because now that the best month of the year is behind them, the homebuilders will know how many workers they need to build the ordered houses. On top of that, they are being pressed very hard to cut costs because they're so close to losing money. That will encourage them to lay off even more workers.

1. Hold cash.
2. Short more stocks
3. Bet on lower rates.