Posted by:  Bill Kirk, CEO

If you read the headlines or watched the non-stop TV coverage on the “MONSTER STORM” you are left to believe this one storm will bring down the retail industry and ruin the holiday shopping season?  Not so fast!

First, recall that LAST YEAR we had the snowiest 10-days prior to Christmas in 114 years (all time record) with 1,230 inches of snow across the U.S. with 60% of the country covered in the white stuff.  Last year across the U.S. 20 of 26 days before Christmas had heavy snow (above average) with 7 days of heavy snow occurring on weekends that truly was a monster event with 8 straight record breaking snowfall days between the 17th and 24th (see national daily snowfall summary chart below).  This prolonged event last year crushed the holiday season with retail industry sales the worst ever at -4.7%.  We also have to recall that last year we had record cold weather with sub-zero temperatures across the northern half of the country the days leading up to Christmas which was a big negative for store traffic as well.  The Northwest, North Central and Northeast all had the coldest and snowiest last weekend before Christmas in decades last year making it a very widespread problem for retailers.

THIS YEAR we’ve had the one mid-week storm (Tue 12/8 – Wed 12/9) in the Midwest which was actually a plus for clearing excess winter seasonal merchandise after the warmest November in 8 years that resulted in -0.1% retail industry same-store sales declines.  As the chart above shows, only about 8 days this December were impacted by heavy snow vs 20 last year for the nation as a whole.  National snowfall for the 10-days leading up to Christmas over the past 17 years showed a 114 year record breaking spike last year with this year trending down 50% to 65% for a more typical December snowfall total.

From December 11th – 19th this year, national snowfall is down 53% vs a year ago and only this one day “Super Saturday” shows more snow.  Last year the blizzards hit on Friday which was probably worse since this year we had Friday with no weather impacts from Philadelphia to New York with 1/2 of this Saturday dry from New York North.  The Washington D.C. area to Philadelphia is clearly the hardest hit area with 12″ to 20″ snow all day Saturday.  The rest of the country – DRY – for about 90% of the rest of the U.S. this Saturday.  Some areas in the Middle Atlantic are without power so that further hampers any on-line purchases that typically soar when the weather is bad.

With much less snow expected for the balance of December, retail industry same-store sales are still likely to post +1% to +3% gains vs last year’s -4.7% and 2007s -0.7% SSS.

Posted by Bill Kirk, CEO

First we had Al Gore airbrushing in hurricanes in his new book, now we have real scientists air brushing out “inconvenient” global temperature history.  A lot has been made about the e-mails from the Climate Research Unit at the University of East Anglia that imply leading IPCC scientists, including Penn State’s Michael Mann used tricks to “hide the decline” but it goes a lot further than just e-mails.  The source code used to generate alarming temperature diagrams in the IPCC reports is far more telling of what clearly is becoming the greatest scientific fraud in history!

The 1st IPCC U.N. global warming report in 1990 acknowledged there was a Medieval Warm Period here on Earth from about 1000 to 1300 AD (warmer than today) and also acknowledged there was a little Ice Age from 1400 to 1900 AD.  This is the chart in the first IPCC Report (Figure 7C).

But that warm period would later become a problem for IPCC as it brings into doubt whether the current warm cycle is man-made or a naturally occurring cycle.  So, in version 3 of the IPCC report in 2001 both the Medieval Warm Period and the Little Ice Age were not airbrushed out but rather using computer programs to smooth out the problem period (Medieval Warm Period) so as to make the current warm period look really bad and unprecedented (see chart below that came from chapter 2 page 134 IPCC report 3)

As more and more analysis is being done on the e-mails but more importantly the programming code/data out of the East Anglia University data sets shows how these so called scientists used ”tricks” that appear fraudulently conceived to “fudge” the data.  Here’s a very small snip it of the code that was used to generate the revised global temperature chart to make it look a lot more scary than reality.  This code creates an artificial 2.5C bias at the end of the infamous “hockey stick” chart that’s not valid since it wasn’t applied to the previous 1,000 years of history.  If it had been, as it should have been, the global temperature record would look a lot more like the first chart in 1990. 

valadj=[0.,0.,0.,0.,0.,-0.1,-0.25,-0.3,0.,-0.1,0.3,0.8,1.2,1.7,2.5,2.6,2.6,2.6,2.6,2.6]*0.75 ; fudge factor
yearlyadj=interpol(valadj,yrloc,x)
densall=densall+yearlyadj

ClimateGate is just the tip of the iceberg as there are many “tricks” that have been used in U.S. government data sets to change one part of history and not the other to make declines in sea ice for example look more exaggerated or unprecedented than they really are.

Dilbert got it right – when in doubt MAKE IT UP!

Posted by:  Bill Kirk, CEO

No surprises here as there were several factors that suggested November was in “no-mans-land” as WTI warned clients like JP Morgan,  Diamond Back Capital and Jefferies months ago.  November retail industry same-store sales were well below the Wall Street expectations of +2% to +7%, coming in at -0.3% according to data from the International Council of Shopping Centers.  The bullish forecasts were based on the very easy comp last year when retail SSS were the worst ever for any month at -7.7% but December 2007-2008 is a good reminder that you can have back-to-back negative retail sales!

So why so bad after a supposedly strong Black Friday?  Blame the weather and cannibalized sales into October and other simple trends.  First, the industry sales history tells us a lot.  October usually outshines November SSS about 87% of the time over the past 30 years.  When October is stronger than expected (it was this year) it leads to a weaker than expected November 73% of cases.  Right off that bat we knew that November would have issues since October was so much stronger due to great weather – 3rd coldest in history, wettest in 114 years and snowiest in 40 years – drove strong demand for must have Fall items.  This canabalized Fall and Winter seasonal merchandise out of November.  So what’s left for retailers to sell us since we already bought coats, sweaters, snow shovels, mouse traps, and firelogs in October?  Holiday gift categories like electronics (actually did well in November) – that’s about it.  Only problem there is consumers are buying holiday gift categories about 2 weeks before the holidays.  Seasonal category sales were further hurt by exceptionally warm November weather – warmest in 8 years!  The chart below summarizes the regional trends across the U.S. (CLICK ON IMAGE FOR FULL SIZE)

While the U.S. was mild, it was actually quite frigid in Russia and China with the coldest conditions in decades so seasonal sales were better in that region (see map below):

So what’s in store for December?  While the National Retail Federation is forecasting gloom and doom (-1%) the news is likely to be better.  Why?  Better weather!  The past two year’s we’ve had record snow and cold right around the holiday which curtails store traffic, consolidated/fewer trips to the mall and a surge in on-line sales.  With a much warmer, drier and much less snowy 2-weeks before Christmas store traffic will remain high benefiting gift categories at the expense of cold seasonal merchandise.  The two very weak Decembers -0.7% in 2007 and -4.7% in 2008 make for very easy comparisons this year – easier than November.  Santa and weather may save the day for brick and mortar retailers this holiday season; WTI expects gains of +2% or better!  Ho Ho Ho.  Be forewardned that cold and snow is likely to return during the last week gift exchange period so hopefully sales are made prior to Christmas.