AXIOMA ROOF™ SCORE HIGHLIGHTS

Investor sentiment spent the past month doing what confidence usually does when it has read the agenda and not yet seen the meeting minutes: it moved away from balance, but without the courtesy of declaring a single culprit. The aggregate ROOF score is now negative at -0.43, down from neutral one month ago, while the past week was little changed at the aggregate level. That distinction matters. This is not a fresh panic. It is a slower withdrawal of willingness to finance uncertainty, with the past few days offering no confirmation that the deterioration has extended, but also no persuasive evidence that it has been repaired. Investors have not slammed the door. They have simply stopped holding it open.

The week ahead gives them several reasons to keep their hand on the handle. Negotiations around access to the Strait of Hormuz remain a reminder that energy prices are not only about barrels, but about permissions, threats, naval geography, and the diplomatic theatre required to pretend those are separable things. The Strait is still a narrow passage through which inflation expectations can be reintroduced to polite company without an invitation. If political actors keep treating access as a bargaining chip, investors will continue treating oil as a policy variable with a fuse attached. That matters because the Fed is already trying to manage disagreement without admitting that disagreement is the policy. CPI, producer prices, retail sales, and consumer sentiment will arrive into a market where FOMC members and investors are divided over next month’s decision. The Fed wants data dependency to sound like discipline; investors hear it as a subscription service with variable pricing.

The AI theme adds a second test, and not a smaller one. After a long period of strong performance, volatility around the buildout has risen just as earnings from Applied Materials, Cisco, and CoreWeave are set to offer another read on the durability of capital expenditure. AI still has the narrative advantage: it promises productivity, platform dominance, and the right to use the word “infrastructure” even when the invoice looks like speculation. But sentiment has weakened enough that good news now has a higher evidentiary burden. When investors are negative, they tend to under-react to positive surprises and over-react to disappointments. That is the operational significance of the ROOF score, not a decorative label. A capex beat may need corroboration; a margin wobble may need only oxygen.

The cross-market evidence says the same thing in a less theatrical accent. Six of the ten markets now have bearish investor sentiment: APAC ex-Japan, Japan, developed markets ex-US, emerging markets, developed markets, and China. The US is negative, not bearish, but sentiment there deteriorated modestly over the week and over the month, making it the one confirming downtrend in the current dataset. Australia remains positive, while the UK and eurozone developed markets are neutral, although UK sentiment has weakened materially over the month. This is a wide enough deterioration to matter, but not a disorderly one. Dispersion sits around the 49th percentile of its history, down from the 58th a week ago and up from the 40th a month ago, with the weekly change classified as little changed and the level firmly mid-range. Investors are not all saying the same thing. They are, however, increasingly speaking in compatible dialects of caution.

China is the one place where the short-term configuration deserves a separate note, carefully handled. Sentiment among China investors is still deeply bearish at -1.10, and it deteriorated modestly over the month, but the weekly change was positive at +0.34 against a monthly change of -0.34. That is an early upturn configuration, reinforced by eight observations of the weekly change holding the same sign and accumulating +0.38 on the ROOF score. It says sentiment may be turning; it says nothing about future returns. The old technical-analysis phrase would call this the sentiment equivalent of a short line crossing a longer one, but the useful point is simpler: the most bearish market in the sample is also where investors have leaned most visibly against the monthly downtrend. That is not absolution. It is a raised eyebrow.

The practical implication for this week is that the recent deterioration looks less like dispositional pessimism than defensive pessimism: not investors deciding the world is irredeemably bleak, but investors lowering expectations first, enumerating the ways the week could go wrong second, and preparing their response third. CPI too hot? Reprice September. Hormuz headlines worse? Revisit the energy-inflation loop. AI capex guidance too leveraged? Ask whether promised cash flows can still fund the buildout, or whether the bill has started arriving ahead of the business model. That is not paralysis. It is defensive pessimism doing its job: sweating the small stuff, funding the contingencies, and making fear useful before it becomes expensive. With aggregate sentiment negative and six markets already bearish, investors do not need a catastrophe to reduce risk further; they only need one of their prepared cash-flow scenarios to stop being hypothetical. Defensive pessimism is what happens when the dream still scales, but the funding line no longer does.

Aggregate ROOF Trend: A one-year line chart of the equally-weighted average ROOF score across the ten markets. The black line is the aggregate mean of ROOF scores across the ten markets; the shaded grey band shows the range from the most bearish market's ROOF to the most bullish market's ROOF on each day, indicating the dispersion of sentiment across the universe. Reading it: a rising line indicates increasing risk tolerance; a declining line indicates increasing risk aversion. 

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.

Market Monitor: A table showing, for each market: current ROOF score, current regime, weekly and monthly changes, regime one month ago, and distance to the nearest extreme threshold. Color cues highlight regime deteriorations (red) and improvements (green). Reading it: scan the "1M Ago Regime" column for markets that have crossed regime bands over the past month; check the "Distance" column to find markets close to the ±0.50 extreme thresholds.

Correlation Matrix (Δ1M): A heatmap of correlations between monthly sentiment changes across all market pairs, over a rolling 60-day window. Green cells indicate that investor sentiment in the two markets changed in the same direction; red cells indicate opposite directions. The rightmost column shows each market's average correlation with the rest of the universe. Important: these are correlations of sentiment changes, not market returns or ROOF levels. High correlation means investor mood in the two markets moved in sync over the past 60 days.