As we continue to navigate the complex and unpredictable landscape of global markets, the question on everyone’s mind remains impossible to answer: what inning are we in? The cyclical rotations that have been unfolding over the past few weeks have left investors feeling anxious and uncertain about the future. Despite the initial optimism at the start of the year, the pace and magnitude of cyclical moves higher have raised concerns about whether we’ve run too far too fast.

The latest data from UBS suggests that the rotation is picking up steam, with the Short versus Long Cycle Industrials pair (UBPTSCLC) surging 387 basis points today after significant gains yesterday and Monday. This marks the strongest move since January 27th, 2025, when the pair jumped 589 basis points. The year began with a cyclical-over-secular mindset, as investors looked to broaden out their exposure in the face of more constructive US macro outlooks. However, the surprise ISM print on Monday and Tech/AI disintermediation unwinds have created a powerful cocktail for these rotations to re-accelerate.

Despite the uncertainty, it’s important to remember that cyclical optimism is still present, and this has been coupled with little differentiation within sectors, themes, or positioning. Industrial volumes are running at 97% above their 20-day average, reinforcing the sense of capitulation. As investors regain the ability to discriminate, it will be crucial to stay informed and adapt to the evolving landscape.