Bill Fleckenstein says that the “next time down” is getting closer:
I expect it to occur in 2007 — because everything seems lined up, as never before, for that scenario to play out. To quote a personal motto from my Web site: “Often wrong, never in doubt.” Various areas in the stock market are more vulnerable than others, though in some ways, it’s all one trade. Consequently, I think the chance for at least double-digit negative returns next year is very high.
The info from Liscio on sales tax receipts is rather interesting:
…it’s quite clear that the consumer is being affected — whether one looks at the sales data from Wal-Mart and other retailers, or at the Liscio Report’s data on state sales-tax receipts. To quote from Liscio’s latest survey: “The weakening consumption trend is now established, and the majority of our tax contacts expressed real concern about a slowing in sales-tax collections. It now appears clear that consumers are not spending the billions of dollars they have saved on gas in recent months.”
Furthermore, when I e-mailed Liscio to share my view that we are entering a recession, here’s the response I received: “We note with a shudder that our indexes look a lot the way they did in fall of 2000, especially the weakening and then big drop in the sales tax survey. The SDI led us into the last recession, and the states that led are very weak right now, as well.” (The SDI is Liscio’s proprietary sales-diffusion index.)
Update: We heard mention of the states having problems with sales tax receipts a couple of months ago.