The Chart Store had a fascinating series of charts this weekend looking at Household Net Worth in a variety of ways:

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Household Net Wealth Relative to GDP

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Household Net Wealth Relative to Peak and Trough

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Housing charts after the jump

Total Residential Real Estate Value

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Owner’s RE Equity (Value minus Debt)

Wayne Madsen was recently in Tripoli so he is reporting on what he saw in Tripoli .Life is normal in Tripoli he says ….. Obama will send 10,000 Troops home from Afghanistan then send 50,000 to Libya! He promises to get all the troops home by 2012… the day after he’s re-elected, right!?!If Obama sends troops to Libya and the American people do not up rise he will be considered a dictator. Congress has already voted against the war in Libya 295 to 123. They have only agreed to funding NATO. If that happens the Patriot Act could go into full effect. police state! Although it is almost already a police country. 1 out of 35 American adults are in prison on parole or on probation, that is 1 out of 35 that have lost their constitutional right to bare arms against a tyrannical govt

A few interesting readings on important indicators. At the end of last week’s client update, we mentioned that there is a potential for a short-term bounce for markets. While any one indicator can not provide a clear picture of the markets and the overall sentiment, these are a few that are recently flashing a distinctly “overly bearish” statement by investors.

The AAII Bullish Index is often a contrary indicator. Some say that the retail investor is “dumb money” and a good contrarian indicator. Notice that the low points of bullish sentiment often occur at market bottoms. Also notice that that high bullish readings occur at key market tops. We see this as a gauge of short term sentiment, used in conjunction with other extreme readings that can “call” a short-term top or bottom.

The McClellan Oscillator is also driving below the level considered to be oversold. It is very important to note that this is by no means a guaranteed indication that there will be an immediate turn. It does help to see when selling may be exhausted and again a short-term top or bottom. The fact that the reading has been creating a pattern below the zero line is negative. Back in March, the level moved as low as -275, one of the lowest readings seen in years. Sharp moves above or below zero are also indicative of mass selling by institutions. They have the power to unload or buy shares that become market moving events. However, institutions are usually patient and will allow markets to cool before they step in again as they have no desire to sink their entire portfolio before they can sell out their positions.

The Put/Call Indicator has reached a point that there are more than 100% put buyers than call buyers. In other words, bets on a decline are not only in the majority, they are overwhelming. This has a similar result as the short interest rising to high levels. Once (if) a bounce occurs, it can be furious to the upside.

Now, looking at the news, the story count for the words SOFT PATCH has been peaking. This shows that stories published on the Bloomberg system are becoming more consistent with an economic downturn. It also means that many analysts and economists are starting to become more bearish. Often times, this will provide for earnings downgrades and economic assumptions to be cut. The more this occurs, the greater the chance for upside surprises. This is one of those oddball areas that we actually like. Since estimates are often too far ahead of themselves on both sides, the opportunity for surprises when downward revisions are occurring are more likely – although not absolute. To make this clear, estimate revision are NOT good, but if they move too far in either direction, it provides some additional wiggle room for the actual numbers to beat or miss.

The correlation of the VIX and the U.S. Dollar continues. This spills over to the the equity markets as well. But, even though the U.S. markets have corrected 8%, there is still a good deal of either complacency or embedded optimism. As the VIX is still well under 20 at this stage, there is minimal fear developing in the markets. Even as the put/call ratio is peaking, the overall VIX has not come close to levels we saw in March. This one could go either way, but the idea that government will not let the economy fail is well implanted in investors minds at this point.

In a note to clients today, David Kostin of Goldman Sachs had this to say:

Discussions with clients this week focused on the risk/reward balance for US equities. Our forecasts reflect a 2:1 upside/downside return profile through year-end 2011. S&P 500 has declined by 5% from its April 29th closing high of 1364. Our year-end 2011 index target remains 1450 representing 12% upside from current levels. A downside scenario suggests an index value of approximately 1210 or roughly 6% below current levels. During the pull-backs the median length time for the market to reach bottom equaled 27 days. Six of the episodes took 20-40 days and on four occasions the decline occurred in less than two weeks. The current sell-off has lasted 41 days and counting. The historical episodes we analyzed had a median time to recover of 41 days. Recoveries during 2003-07 typically took longer than the speedy rebounds since 2009.

That report also noted that there have been a spat of economic disappointments that have set the tome for this correction, yet earnings estimates and outlook have changed little:

Earnings: S&P 500 consensus 2011 and 2012 earnings estimates are up during the past month. The same is true for six of ten S&P sectors. Our earnings revisions sentiment indicator, which measures the balance of positive and negative revisions, is also positive for eight sectors. Broadly speaking, earnings estimates have risen for the market and most sectors, providing support for fundamental investors ahead of the 2Q earnings.

If true, then this correction has all the makings of providing a similar pattern to others that will cause stocks to snap back two weeks or so prior to the beginning of the next earnings season – which begins on July 11. So, that would mean that the remainder of June could be choppy and a run-up into earnings starts in July. Something to consider.

It is going to be a busy week for economics. Both in the U.S. and on a global basis.

Last week’s dramatic decision by the US administration to strongarm the IEA into releasing strategic petroleum reserves (of which the US would account for 30 million barrels, or half of the total), is nothing but yet another example of the hobbled and incredibly short-sighted thinking that permeates every corner of the Obama administration. Because as the WSJ reports, “the move by the U.S. and its allies to release strategic reserves of oil could provide a much-needed shot in the arm for the U.S. economy, but risks inflicting lasting damage on the already tense relationship between oil producers and consumers.” The move comes on the heels of the dramatic collapse in OPEC talks in Vienna two weeks ago when Saudi Arabia was effectively kicked out of the cartel, further confirmed by reports that the IEA consulted with Saudi (and China and India) in advance of its decision (more later). Additionally, “OPEC and the European Union are due to hold an energy summit in Vienna Monday that will be the first official meeting of producers and consumers since the IEA’s move, and will provide a platform for OPEC members to express their disquiet over the stocks’ release. However, OPEC’s biggest player, Saudi Arabia, won’t be present.” Make that former player, in an organization now headed by the previously #2 producer, Iran (which just happens is not all that pro-US). The biggest threat, however, is that in direct retaliation against the IEA’s cartel-like decision, which comes at the expense of the remaining OPEC countries, is that as Zero Hedge suspected, the next step will be a more than proportionate cut in crude production by OPEC: “Some analysts speculated that OPEC could respond to the IEA release by cutting output to offset the increased supply.” What happens next is complete Nash equilibrium collapse, with a high possibility of a 1973-type OPEC oil embargoannouncement in the immediate future.

“Going ahead with an increase would cut into revenue, said Christof Ruehl, chief economist of BP PLC. But cutting production to offset the release, he said, “would be seen as hostile by IEA members” and “could lead to a war of attrition, at least as expensive,” in which OPEC cuts production and the IEA keeps releasing stocks to make up for the shortage.” The winner of all this, is of course, China, which will gladly benefit from ongoing blue light specials courtesy of the US Strtategic Petroleum Reserve to build up its own reserve holdings, as the rest of the world squabbles over a US-dominated status quo whose time has now officially passed. And just as therare earth metal price spike in recent weeks demonstrates what happens when China is the marginal anything in any supply chain, one can be certain that the price of Crude will be far, far higher several years from now.

And speaking of Iran, its oil ministry SHANA wasted no time in firing the retaliating round against the IEA’s decision, accusing the US of acting unilaterally and purely for the benefit of Obama’s reelection campaign, warning that the drop in oil prices won’t persist:

Iranian governor for OPEC Mohammad Ali Khtatibi says International Energy Agency (IEA) decision to draw oil from its emergency reserves implies intervention in the ordinary function of the oil market.

Speaking to Shana, Mr. Khatibi said that the trend of falling oil prices would not be sustainable.

‘Following the failure to bring down the prices at 159th ministerial meeting of OPEC in June 8, the United States of America and Europe are using all the means to push oil prices lower, Iranian governor for OPEC said.

Khatibi noted that IEA’s initiative to release oil from strategic petroleum reserves would followed by artificial falling of oil prices but those countries believing in open markets showed they are not genuine in their believes.

According to Khatibi recent days’ developments in oil market is not the result of issues relating to supply and demand or market needs but political pressures by the United States drives the initiative.

‘The United States government plans to influence the results of the upcoming presidential elections of the country by putting pressure on oil prices’ top Iranian oil official said.

Khatibi pointed out that developed countries initiative to draw oil from strategic petroleum reserves is risky because they cannot continue the move in the long term.

He added: these reserves are being held for emergency situations so the consuming countries of the International Energy Agency will have no other choice except to replenish the reserves for further use.

Indeed, if Obama’s reelection campaign is such an emergency that it requires tapping the SPR, what will happen when there is a real emergency: such as a repeat of the 1973 OPEC embargo, which set the stage for Volcker’s last minute and very painful intervention to prevent the US economy from tailspinning into an inflationary supernova?

And just to make sure things get even more polarized, Dow Jones reports that the “International Energy Agency consulted Saudi Arabia, China and India before it authorized the release of some of its emergency reserves, the agency’s executive director said Sunday.”

“They understand, and they appreciate the action,” Nobuo Tanaka said on the sidelines of the second Global Think Tank Summit in Beijing.

The release of some of IEA’s strategic stockpiles is meant only to fill the gap in supply until higher crude volumes from Saudi Arabia reach the global market, he added.

Oddly enough, the leadership at the IEA is just as clueless as that of the US:

Separately, Tanaka said he asked China once again to join the IEA on Saturday. Although there hasn’t been any official response, Tanaka said he was encouraged by China’s recent statement publicly welcoming the IEA’s strategic stockpiles release.

Of course they welcome it you idiot, because they will be buying everything your member countries have to sell, and thanks to your stupidity, at a welcome discount. And why the hell would China want to join the IEA when it gets all the benefits of participation, without any of the obligations of being a member (i.e., adhering to your retarded politically-motivated agenda).

Good luck buying it back at the same price when OPEC fires its own warning shot and announces it is reducing crude output for all remaining OPEC countries (ex. Saudi) by 10-15%. And yes, Goldman will promptly move it Brent sell recommendation to a buy, within hours of said announcement.