What distinguishes cyclical from defensive sectors, and how does the leadership rotate across the cycle?

Defensive sectors sell things people buy regardless of the economy — consumer staples, utilities, healthcare — so earnings are stable, betas are lower, and they outperform RELATIVELY in downturns. Cyclical sectors' earnings swing with the economy — consumer discretionary, industrials, autos, banks, energy, materials, semiconductors — amplified by operating leverage (high fixed costs make profits leveraged to volumes). Rotation logic: early cycle, as conditions ease and recovery starts, cyclicals and small caps lead because their earnings rebound hardest off the trough; mid cycle, leadership broadens; late cycle and into the downturn, investors pay up for the certainty of defensive earnings. Two refinements worth adding: rate sensitivity is a separate axis — utilities and other 'bond proxies' behave defensively on earnings but suffer when yields rise; and cyclicals' multiples are deceptive at the extremes, looking cheapest on peak earnings precisely when they're most dangerous.