AXIOMA ROOF™ SCORE HIGHLIGHTS

• US: April’s personal income and outlays, the PCE price index. Q1 GDP revision.
• Europe: Eurozone inflation, consumer and business confidence data.
• APAC: China’s April industrial profit data. Japan’s unemployment, industrial production, retail sales, consumer confidence, and Tokyo inflation figures. Australia’s inflation data.
• Global: Reopening Hormuz and restoring energy exports remains key for global markets.

We are ~12 weeks into the Hormuz closure and everyone is still talking about oil and how the energy shock is driving inflation. Two more supply shocks hide in the shadow of Hormuz: Urea, a key input into fertilizers, has already repriced sharply at $850/mt in April, up ~80% since February, and helium, a non‑substitutable process gas for semiconductors fabs - no high‑purity helium means yield loss or tool downtime. Fertilizer is the faster channel, already repricing and feeding into the next planting cycle, reinforcing second‑round inflation pressures. For helium, if disruption persists, even modest curtailments feed through with a lag given ~6‑month semiconductor lead times, pushing any chip supply shock into Q4. For inflation, energy was the first punch, fertilizer the second, helium is the late‑cycle uppercut.

That sequence is now starting to show up in both consumer confidence and market pricing. The US Consumer Sentiment Index plunged to a record low of 44.8 in May 2026 as consumers grew more worried that inflation would spread beyond fuel prices in the long term. Year-ahead inflation expectations edged up to 4.8% from 4.7%, while long-run expectations climbed to 3.9% from 3.5%. What worries investors isn’t just valuations (too high) or earnings growth (too concentrated), but inflation expectations and their impact on real yields which have already risen from 1.72% on February 27th to 2.18% last Friday. This rise in real yield might forces investors to reprice AI’s long-duration revenue promise by applying a higher discount rate on future revenues. For markets, this means that there is no longer a one-Fed-fits-all-investors: bond investors want a hawkish Fed that isn’t here yet, while equity investors want/need a dovish Fed that isn’t here anymore.

The Telecom Crash of 2001 showed what happens when capital races ahead of demand. In the late ’90s, operators didn’t just overbuild—they pre-sold decades of capacity via IRUs. When the cycle turned, as much as 80–95% of long‑haul capacity sat unused, not because demand was fake, but because capacity had arrived too early and been overestimated. Telecoms prepaid the future demand and waited a decade for it to show up. Abundant capital can build capacity, but only real workloads can fill it. Is the AI data center bubble a Telecom rerun?

The rise of AI stocks since the release of ChatGPT in 2023 has been phenomenal. Some worry that the sudden influx of new investors that accompanied this surge — none of them forged, as it were, in the fires of the Telecom Crash of 2001 — might have erased the memory of potential loss, and that investors might start taking ongoing record highs for granted. Like Adam watching Eve arrive in paradise and immediately ‘reach’ for something better…

Hormuz remains the biggest known unknown for markets. Once again, good intentions have collided with geopolitical reality: the war has dented US leadership credibility and, for now, lifted China. In May, Beijing appeared to replace Washington at the center of geopolitical gravity. China’s role, however, still leans more toward protecting allies than shaping outcomes. Markets reward outcomes, not unused influence. If others make the peace, Xi may find that what looked like leverage was only optionality—and that by not exercising it, he weakened his own hand.

As of Monday morning, talks of peace, in lieu of actual peace talks, are once again giving investors hope that Hormuz will be returned to its factory setting. Oil futures fell 5% last week on the ceasefire extension and another 5% this morning as both sides outlined their version of a longer truce—still limited to a partial reopening of Hormuz, with no clarity on whether transit will be free or pay‑to‑pass. For now, that addresses only a fraction of what a durable agreement would require: no progress on sanctions relief, blocked Iranian funds, the US blockade, or a comprehensive nuclear framework. Sentiment had already begun to recover across all markets and should continue to do so as investors focus on future oil prices instead of lagging inflation data due out this week. Pain forgets within the hour what it learns in an instant.