Geopolitical Risks Research

The market trades lower following a slightly worse ADP Employment report and a notably weaker ISM Non-Mfg report at 10am.  In today's selloff, financials trade essentially in-line with the broader tape.  We're now at the tag-end of earnings, the group is beginning to trade more and more with the market on macro factors.  The higher beta sub-sectors are showing more weakness today (KSX due to asset manager exposure, KRX  and life insurance).  While off marginally, REITs are slightly outperforming the tape as interest rates continue to fall. Volumes on the day are tracking in-line with yesterday's pace, which exceeded the 20-day MA by ~15%. Flows are active in today's trading, showing both HFs and vanillas active. Generally, derisking appears to be the main trade being done today, as we're 2:1 better for sale in the group.  In the banks, we're seeing long positions get cut in both the money center and super-regional names, mostly from the HF community. Little vanilla interest is being seen in any of the large banks today from the vanilla community, which seems to be focusing more and more on the smaller cap regionals. In credit cards, we're seeing HFs take money off the table, after vanillas have been better for sale in the group for about a week. In insurance, we're seeing some small covering in P&C, however we're better for sale overall there. Life names are better for sale, including shorts, in the the lower-quality names. Look for the group to start to trade more and more on macro fundamentals as company and industry-specific catalysts draw to a close with the earnings calendar coming to an end.