AXIOMA ROOF™ SCORE HIGHLIGHTS

• US: Services PMI, trade balance, factory orders, and labor cost data. Earnings from Palantir Technologies, Walt Disney, Uber, Caterpillar, Pfizer, Advanced Micro Devices, Amgen, McDonald’s, and Eli Lilly.
• Europe: UK BoE interest rate decision. Eurozone retail sales and producer prices data. Germany’s factory orders, industrial production, and trade figures data.
• APAC: China balance of trade, Services PMI, and inflation data. Minutes from last week’s BoJ meeting.
• Global: Focus will remain on responses to the latest tariffs from the Trump administration as well as the threat to the independence of the Fed and the Bureau of Labor Statistics.

Investor sentiment remained bullish in seven of the ten markets we track, but ended the week off its peak as markets absorbed a one-two punch: a mini “Liberation Day” and a dismal U.S. jobs report, capped off by a presidential tantrum. In China, bullish sentiment began to fray as the Politburo meeting wrapped with no mention of expanding current stimulus measures - nor any hint of new ones - leaving investors disappointed and markets adrift. Europe and Japan managed to sidestep steeper tariffs by striking deals with the Trump administration, keeping sentiment neutral. But after the dealmaking comes the hangover, and investors are now left to parse the fine print in an increasingly unpredictable global landscape (a.k.a., “what exactly did we just agree to?”). 

In its quest to remake the world in its ‘America First’ image (wasn’t it always?), the Trump administration has systematically discarded the rule book. And the economic book. And the science book. And the international relations book. But more critically for markets, it has abandoned the principles of transparency, independence, and predictability - cornerstones of strategic planning for CEOs, business owners, and institutional investors. Without these, capital allocation becomes guesswork, risk premiums rise, and the economy begins to stall under the weight of uncertainty.

The July Jobs Report underscored this fragility: only 73,000 jobs were added, well below expectations, and previous months were revised sharply downward from 291,000 to just 33,000. The unemployment rate ticked up to 4.2%, and the household survey showed a decline of 260,000 workers, with labor force participation falling to its lowest level since 2022. This was followed by a bizarre episode of ‘shoot-the-messenger’ as the White House starts to resemble the Topkapi Palace, where information was so tightly controlled, guests had to infer what was happening from which corpses floated by them in the river on the way in.

As every employed person knows, the first sign that all isn’t going according to plan, is when management announces a hiring freeze. The job market is the canary in the economy’s coal mine - and judging by this latest report, it may have just made its last squeak.

The U.S. market has been on a tear since April 9th, when the Trump administration announced a pause in the Liberation Day tariffs. But a closer look reveals rising signs of unease beneath the surface. Investors typically rebalance portfolios for one of two reasons: because they need to (to stay compliant with risk mandates), or because they want to (to align with new return expectations). The ROOF Score methodology captures both motivations with its eight indicators of investor preference, and two that reflect shifts in the risk environment.

Until April 9th, the ROOF Score and its sub-score (excluding the two risk metrics) were closely aligned, suggesting investors were rebalancing based on conviction (want) rather than compliance (need). On that date, both scores were negative: the headline ROOF Score at -0.31 and the sub-score at -0.39. By July 31st, the headline ROOF Score had surged to 1.37, signaling strong bullish sentiment. But the sub-score rose only to 0.26 - a barely positive reading. This means that over 68% of the sentiment rebound during this period was driven by a need to re-risk portfolios in response to declining market volatility, not a genuine shift in investors’ return outlook. 

In short, the rally is being powered more by falling risk than rising return estimates. Investors may be back in the market, but their willingness to speculate hasn’t changed much. Faced with declining transparency and rising uncertainty, it suddenly feels like a they are playing a different game where the plays are always never the same and no one’s handed them the new rule book: instant imposter syndrome.

Regime Distribution: Three horizontal stacked bars show how the ten markets are distributed across the five regimes — today, one week ago, and one month ago. Each bar is colored by regime: red (Bearish), yellow (Negative), grey (Neutral), blue (Positive), green (Bullish). The white vertical marker on each bar shows the aggregate ROOF score for that period. Tick marks below the bars align with the regime thresholds at ±0.20 and ±0.50. Reading it: a leftward shift over time indicates broadening deterioration; a rightward shift indicates broadening improvement. Widening tails signal rising dispersion.