Outside of housing, the economy continues to boom—as does the stock market. Ed Yardeni of Oak Associates makes a great point:
It's been a great year for the stock market as long as you didn't own any stocks in commercial and investment banks, thrifts and mortgage companies, housing-related firms, retailers, autos, and publishers. Indeed, as long as you avoided falling into these sink holes, double-digit gains have been widespread: Energy (27.9% ytd), Materials (19.6), Utilities (17.0), Information Technology (15.5), Consumer Staples (12.5), Industrials (10.3). Telecommunication Services (8.8) and Health Care (6.8) have recorded healthy gains too. Only two sectors have had losses this year so far and they've been in the double-digits: Financials (-20.8%) and Consumer Discretionary (-13.6). ... Will it be so lopsided again in 2008? It probably will be through the first half of next year. But Financials and Consumer Discretionary could broaden out the bull market I foresee during the second half of the year as their earnings comparisons turn very positive. This assumes, as I do, that the recession scenario will become increasingly less likely after mid-2008.
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