AXIOMA ROOF™ SCORE HIGHLIGHTS

• US: PMI and consumer confidence data, and surveys by multiple regional Fed banks.
• Europe: Eurozone and UK PMI data. Germany’s consumer confidence data. UK CPI.
• APAC: China’s February industrial profits. Japan’s inflation and PMI data, and minutes from BoJ meeting.
• Global: The Persian Gulf Catch‑22: exit risks Hormuz; escalation risks supply.

The nature of markets is change, and the nature of investors caught in a bubble is denial. Last week, Jamie Dimon’s cockroaches got a plus‑one: Goldman Sachs’ David Solomon joined him in pushing back against the notion that ‘this time is different’ in credit, reminding investors that private credit didn’t escape the cycle — it just locked the exits. Recent tremors are a warning shot, not an anomaly. Redemption pressure, underwriting doubts, and JPMorgan’s tighter lending all signal that risk is re‑pricing — exactly what happens when a cycle turns after years of private credit firms quietly mainlining software loans during the easy‑money era.

Sentiment isn’t static; it moves through like a storm system, and when it gains enough force, it drives markets into overshoot — bullish or bearish. Investors have been bearish for five straight weeks, leaning into defensive trades and pricing in the worst‑case scenario for this war. With expectations now set extremely low, reality doesn’t need to be good — it just needs to be less bad than feared for sentiment to lift from here. That raises the real question: have we already absorbed the worst of this conflict (oil at $110–120), or is an even bigger shock still ahead (oil at $150–200, looking at you Kharg Island)? If it’s the former, sentiment should start to recover, pulling risk tolerance and markets up with it. If it’s the latter, then a second cold front remains unpriced — and investors may prefer to namast’ay in bed.

Identifying where we are in this Iranian storm system — in the eye or already past it — has been made harder by the Trump administration’s conflicting signals on the trajectory of the war. It claims the US has “won" (whatever that means) and “met its goals” (whatever those were) “weeks ahead of schedule” (whenever that was). At the same time, it threatens to “hit and obliterate” Iran’s power plants if the Strait of Hormuz isn’t reopened within 48 hours. It also says Iran wants to negotiate, but Washington does not, leaving any potential back‑channel offramp effectively closed from the US side.

Investing is forecasting. Investors are always focused on an immediate future permanently dangled in front of them, but when the present falls apart, as it did with the closure of the Straits of Hormuz, so does the future they had associated with it. And having the future taken away from them is the mother of all plot twists.

The mood stayed broadly risk‑off across markets last week, with sentiment in 8 of the 9 markets we track finishing firmly bearish. A brief mid‑week flicker of hope — mostly in EM and parts of Asia — didn’t hold. By Friday, risk aversion was back in charge. China saw the sharpest deterioration in sentiment, while the mood in Developed Markets ex‑US and Australia also weakened into the close. Global Emerging Markets improved and Europe grew less bearish, but neither came close to a regime change (pun intended). Overall, sentiment ended the week decisively bearish, keeping reactions skewed to the downside if and when reality turns out worse than already low expectations.