In a surprising turn of events, asset managers have shifted to a more hawkish stance in recent days. According to the latest flows data, both liquidity providers (LOs) and hedge funds (HFs) are skewed towards selling, with a particular emphasis on macro products, industrials, and healthcare. This shift is a departure from previous comments, where asset managers were more neutral in their outlook.

The data shows that LOs are 5% better sellers than buyers, with the majority of their selling concentrated in energy, consumer staples, and materials. On the other hand, HFs are significantly more aggressive in their selling, with a focus on info tech, macro products, comms services, and consumer staples. The only sector where HFs are buying is in materials, and even there, their buying is relatively modest.

The implications of this hawkish shift are far-reaching. For one, it could be a sign that asset managers are becoming more risk-averse in the face of growing geopolitical tensions and economic uncertainty. This could lead to a more cautious approach to investing, with a focus on defense and stability rather than growth and expansion.

Moreover, the skewed selling patterns among asset managers could have a ripple effect on the broader market. If asset managers are selling more than they are buying, this could lead to a decrease in liquidity, which could in turn impact the ability of other investors to buy and sell assets. This could have a cascading effect on the entire market, leading to a decrease in prices and a more challenging investment environment.

Of course, it is important to note that this hawkish shift may not necessarily portend a bear market or a significant downturn in the broader economy. However, it is a development worth monitoring, as it could be an early indicator of a shift in investor sentiment and a potential change in the overall market dynamic.