What if Sunbelt builders' incentive war collapses their margins?
A Sunbelt builder rate-buydown/price war compresses homebuilder margins and drags resale comps lower — short the homebuilder ETF (XHB) and watch building-product names — a margin-squeeze story more than a credit event. Rhymes with the 2007-08 builder collapse and the 2018 rate-shock air-pocket in homebuilders. The modeled hawkish-Fed/US-yields cascade is plausible as backdrop, but the trigger is competitive margin destruction; recession and mortgage-rate sensitivity capture it better than fed_hawkishness. Roots slightly off but defensible — leave as a borderline-OK.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Sunbelt homebuilders slash prices and buy down rates so aggressively that margins collapse and resale values reprice down. The trigger decomposes into signed root‑shocks — Fed policy path ▲ · Recession signal ▲ — which propagate through our causal graph to the markets below.