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Five Things You Need to Know: Wal-Mart Toughens Rules for Gun Purchases

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Them's fighting words.

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Kevin Depew's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Producer Prices Surge

Producer prices (also referred to as "wholesale prices" by some media outlets - all part of the grand conspiracy to cause confusion) rose 1.1% in March, the second-largest monthly increase over the past 33 years. Clearly, inflation has us square in its icy grip, right?

Well, while the Labor Department's Producer Price Index "headline number" (that's the one referred to above) came in almost three times higher than economists' expected, the core rate (which excludes food and energy rose a mere 0.2%, in-line with consensus expectations.

So, headline number versus core number, what gives?


2. Here's What Gives

Look, we're all (for now) paying more at the pump for gas, and more at the grocery for food, what we keep coming back to in the producer price indexes is the spread between Finished goods (those ready for sale) versus Crude goods (those right off the boat, out of ground, forest etc.).

Below is the updated annual percentage change for Crude goods, courtesy of Thechartstore.com:

PPI Crude Goods
CLICK TO ENLARGE

PPI Finished Goods
CLICK TO ENLARGE

Ok, but what do these charts show? These are simply the annual rate of change of producer prices, prices at the wholesale level, for finished goods and crude goods. What is interesting to us is the spread between the two rates of change.

Put another way, these charts show finished producer prices unable to match pace with crude goods. Going back in time on the charts, we can see that crude goods frequently outpace finished goods, but what is interesting this time around is the extreme on the spread, which can be seen easier, below:

CLICK TO ENLARGE



3. Meanwhile, Back In Reality, Foreclosures Continue to Increase

The number of U.S. homes receiving at least one foreclosure filing, including default notices, auction sale notices and bank repossessions, jumped 57% in March compared to a year earlier, according to according to RealtyTrac.

There is good news and bad news here, however. The bad news is the worst of the worst is still ahead. A wave of resets of adjustable-rate mortgages will occur in May and June. The good news is that should be the end of the worst of the worst loans.


4. Bleedover

This morning we caught where Richard Fuld, CEO of Lehman Brothers (LEH), said the "worst is behind us." Of course, by "us" he meant "them." I mean, we know the worst of adjustable-rate mortgage resets (and, by extension, foreclosures) is ahead of US. But wait, there's more.

A New York Times article this morning ("Retailing Chains Caught in a Wave of Bankruptcies") cataloged the store closings and job losses mounting in the wake of weak consumer spending and tight credit conditions - and to think we have likely not even seen a peak in the drawdown in consumer spending yet!

According to the Times, Linens 'n Things may file for bankruptcy as early as this week. Foot Locker (FL) plans to close 140 stores, Ann Taylor (ANN) will close 117.

Economic hardship runs two ways. The current bout of Wall Street hardship is only now beginning to trickle down to Main Street. But economic hardships on Mains Street eventually run back up the chain, back to Wall Street. So, when Wall Streeters proclaim "the worst is behind us," we can at least take some schadenfreude-dipped comfort in knowing that our worst is still ahead of them.


5. Wal-Mart Toughens Rules for Gun Purchases

I know what you're thinking: "Them's fighting words." Just please don't, ahem, shoot the messenger. Wal-Mart (WMT), the nation's largest seller of guns, yesterday said it will toughen rules for firearm sales at 1,100 stores nationwide.

Wal-Mart said it has agreed to a 10-point code with Mayors Against Illegal Guns as part of the Responsible Firearms Retail Partnership program.

Minyanville has learned part of that 10-point code will include a stringent questionnaire potential gun purchasers will be required to complete. Minyanville has obtained a copy of the new, tougher questionnaire below:

1. Do you have any of the following nicknames (Circle below if applicable):
"Buckshot"
"Tex"
"The Bristol Pistol"
"Bullet"
"Vigil Annie"

2. Have you ever accidentally hit a trespasser, banker or government man with a warning shot?

3. Will this gun be used for huntin' varmints? (Please choose one):
a. Yes.
b. No.

4. If you answered "No" above, why not? They're just varmints!

5. Will this gun be used for killin' and such? (Please choose one):
a. Yes.
b. Not as long as ain't no one stickin' their nose in business what don't concern them.

6. If you answered "Yes" above, will the killin' and such be cause they had it coming to them?

7. Has anyone ever called The Law on you for something you did with a gun?

No positions in stocks mentioned.

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