AXIOMA ROOF™ SCORE HIGHLIGHTS

• US: Retail sales and PMI data.  Fed Chair Nominee Warsh testimony before Congress. Earnings from Tesla, Intel, UnitedHealth, Amex, and P&G.
• Europe: Euro Area PMI data. UK inflation and retail sales data. Germany PPI data.
• APAC: PBoC interest rate decision. Japan trade surplus, inflation, and PMI data.
• Global: Round two of US-Iran negotiations and the risk of another “No Deal” snapback.

Welcome to week eight of Operation Epic Fury. To recap, while March – a month aptly named after the God of War – was defined by its bombing campaigns and consecutive escalations, April has thus far been about diplomacy as the Trump administration scrambles to restore the Strait of Hormuz to its pre-war factory setting. For investors, there has never been a more ambiguous war, goal-wise, end-wise, or otherwise.

Bearish ROOF Scores across most markets since mid-February reflected the implementation of flight-to-safety strategies by the majority of investors. In March, each time they dared to step back into the market thinking the latest Presidential Tweet had cleared the uncertainty, they found the risk premium still wedged in place, like the sword in the stone. Only a contrarian, mightily risk-tolerant investor could wring it out - and even then, not without moving the market around it.

April saw the guns go quiet as peace talks began. The contrarian thesis - an occasional understudy to the consensus view, drafted when uncertainty is high enough for opposing narratives to coexist - stepped up to the sword and began to wring the premium out, pricing in peace and, more specifically, a functioning Hormuz. The risk premium fell with surprising force in April, putting most markets back on their pre-March uptrend - albeit on unconvincing volumes - a sign the premium was being wrung out, but has not yet cleared.

For investors, talking beats bombing, but the sword has not yet fully cleared the stone. The gap between the two negotiating parties is not just tactical; it is conceptual. The US sees oil as something to secure in this war; Iran sees war as something to wage through oil. Put differently, Washington thinks of oil markets as being shaped by war, while Teheran thinks of war as a tool shaped by oil. For the US, oil is an asset to stabilize, secure, and regulate - through military means if needed - because oil is the object US actions try to control or protect. Iran, by contrast, views oil and Hormuz as a lever: something you can disrupt to raise costs, pressure the Trump administration via global markets, and shape the conflict itself. That is why, for the US, oil is an asset to protect; for Iran, it is a weapon to deploy - and why the US treats oil as infrastructure within the conflict, while Iran treats it as the battlefield itself. This gap in priorities and ways of thinking is the threat to current peace negotiations (another “No Deal” outcome): the blade has not yet cleared the stone, and the risk premium can re-wedge itself as quickly as it has been wrung out.

Against that backdrop, the ROOF Scores capture how far investors have actually followed the narrative into risk. Investor sentiment remains bearish in five of the ten markets we track, dips in and out of bearishness in another (Global Emerging Markets), and has weakened to very negative levels in the US for the first time in this crisis - after remaining only mildly negative throughout March. European investors reacted passively to news of Viktor Orbán’s election loss in Hungary, staying bearish last week, perhaps fearing that Rumen Radev’s win in Bulgaria could make him Orbán’s replacement in the EU’s “unanimity trap.”

In short, the ROOF Scores suggest March’s risk-aversion gloom has cleared the runway, and risk tolerance is on approach but not yet cleared to land - leaving sentiment vulnerable to a single adverse headline.