AXIOMA ROOF™ SCORE HIGHLIGHTS

• US: FOMC minutes, PMIs and consumer confidence survey data. Nvidia earnings.
• Europe: Eurozone PMI data. UK inflation, unemployment, and retail sales data.
• APAC: China industrial output, retail sales, unemployment, housing prices, and fixed investment. Japan Q1 GDP.
• Global: With no help from China, it’s decision time for the US in Hormuz – escalate or retreat?

American voters were promised peace in Ukraine and no more foreign wars. So far, the administration has managed neither. It has been unable to pour oil on troubled waters in Ukraine, or water on troubled oil in Hormuz after its own foreign policy helped set it alight. The promise of peace and stability abroad was perhaps too lofty for contentment and the approach too chaotic for achievement. On the narrower test of regime change, the administration may now be 0-for-3: Venezuela, Iran, and Cuba. Meanwhile, the costs at home are mounting.

Last week was dominated by the first of three planned Trump-Xi meetings. With the wars in Ukraine and Iran still imposing heavy economic costs, investors feared the administration’s doctrine of Peace through Strength could slide into Peace through Compromise if Chinese help came at the price of Taiwan. Trump wanted Xi’s help on Iran; markets wanted reassurance that help would not come with strategic concessions. 

Xi, by contrast, was always likely to press the Taiwan question in a way which could be neither answered nor dodged and which, whether said for effect or not, got its effect just the same. In the end, neither side got what it wanted: Trump did not secure meaningful Chinese help on Iran, and Xi did not obtain U.S. indifference on Taiwan. For investors, that was enough. They were not looking for a breakthrough; they were looking to avoid a costly bargain. In that sense, the status quo was the best outcome.

Against that backdrop, the geopolitical chessboard is entering the endgame. The U.S. may have picked off a pawn in Maduro, but it now finds itself in check in Hormuz. From here, Washington must either press the position or concede the initiative. The chess clock is ticking: downside risks to growth and upside risks to inflation are rising, limiting the scope for delay. That macro bind is already visible in the second-quarter 2026 survey of professional forecasters, which shows the near-term outlook for the U.S. economy deteriorating relative to three months ago and expects Q2 CPI at 6.0%, up from 2.7% in the previous survey. It also leaves the Fed facing a more awkward handoff, following the highest number of dissents on a policy statement since the early 1990s.

That handoff now looks less disruptive than feared. Kevin Warsh was confirmed as the next Fed Chair and will succeed Jerome Powell when Powell’s term as chair ends on Friday. But because Powell will remain on the Board as a governor, and Lisa Cook also remains in place pending the Supreme Court’s ruling in Trump v Cook, Warsh effectively takes Miran’s seat rather than creating a new vacancy. That reduces the immediate risk to Fed independence that investors had been pricing. Since last year, markets had feared the administration could secure three seats on the Board; for now, it gets only one. The conductor may be changing, but the orchestra is still playing from the same score. With inflation still running hot, investors will remain alert to any sign the music is no longer following the page. A ruling for Trump could quickly reopen that risk.

The combination of status quo in Taiwan, a resilient Fed, and no new weekend escalation helped lift U.S. investor sentiment to its highest level of the year so far. Investors in three markets—Asia ex-Japan, China, and global emerging markets—remain firmly bearish. Europe stayed negative, while UK investors recovered from the previous week’s election shock and turned positive. Elsewhere, sentiment held neutral.

But here we are again on Monday morning, wits renewed, armpits refreshed, asking what geopolitical surprise the week has in store for markets. The new normal is ill-suited to the Buffett investment style and requires the daily suspension of any awareness of the long game. Instead, investors focus their energy on the temporary, the stopgap, and the impulsive. They return to the now-familiar contrarian trade, because the long game is no longer practical in a market where return paths are harder to predict and volatility remains tied to the next policy impulse.