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.

Posted by Bill Kirk, CEO

Here we go again – only inconvenient truth are the FACTS don’t support Mr Gore’s global warming hysteria.  When the climate data doesn’t support your position or alarmist rhetoric – MAKE IT UP!  That’s exactly what we see in Al Gore’s new book “Our Choice” released this month.  We can start with the front of the book.  The images below show the real global satellite image used (left image) and the one that finally made it onto the cover of the book with a little creative editing (right image).  Thank goodness for Paint Shop Pro or the cover of the book would have been a lot less scary.  The image on the left is the real satellite photo which shows permanent Arctic Sea Ice is still here (biggest in several years), no scary hurricanes as global tropical activity is at the 2nd lowest levels in 50 years according to the experts at Florida State University – Ryan Maue (http://www.coaps.fsu.edu/~maue/tropical/).  The image on the right is what made it into the book.  The sad thing is the basic meteorology is wrong here with a hurricane spinning clockwise off Florida, a hurricane over the equator – not possible and magically the Arctic ice is gone. (CLICK IMAGE FOR LARGER VIEW)

The current global temperatures is +0.28C above the 30-year average but that’s down from the peak of +0.8C in 1998 (hottest year in recent decades) and even a little cooler than 21 years agon when temperatures were +0.2C to +0.4C above average in 1988. 

Speaking of 1988 wasn’t that the year of the “sweaty” congressional testimony from James Hansen who made dire predictions.  Recall that in 1988 the predictions for 20 years from then (that would be now) were

1) Global temperatures would be 1.5C above average – hmm that didn’t happen. 

2) New York City’s West Side Highway just blocks from Mr Hansen’s apartment would be underwater – hmm that didn’t happen. 

3) Severe droughts would be plaguing the Northeast with signs reading “water by request only” – hmm that didn’t happen as we’ve had exceptionally wet years in the 2000’s and several years of 100 year flooding events. 

4) Hurricanes would become devastating and widespread across the world – Ryan Maue’s data shows a near 30 year low (2nd weakeast in 50 years and dramatic plunge since 2005) so that didn’t happen. 

As we enter this 32-year cold phase of the Pacific Decadal Oscillation (PDO – read up on it) Cycle (cooling of the Pacific Ocean = cooler planet, warm phase was 1975-2006 = warm planet, cold phase was 1943-1975 very cold period on Earth, etc.) that started in 2006 we’ll continue to experience cooler trends here on Earth and that will inevitably result in more creative editing of the data to support the alarmist’s cause to establish a global government funded by all of us with a cap & trade tax.  Some IPCC scientists just recently made a new prediction that global cooling may take over for 30 years until warming resumes in 2040 due to the little understood influence of PDO and the Sun! hmmm  Those two things weren’t that important in the IPCC documents getting nothing more than a foot note – now it’s suddenly a big deal! 

Just recently the University of East Anglia (UK) Climate Research Unit was hacked with over 60 megs of files and e-mails taken that paint a disturbing view of what’s going on with government funded climate research.  The e-mail below suggests that if the data doesn’t support your cause – make it up (more from the BBC http://news.bbc.co.uk/2/hi/science/nature/8370282.stm)

From: Phil Jones
To: ray bradley ,mann@xxxxx.xxx, mhughes@xxxx.xxx
Subject: Diagram for WMO Statement
Date: Tue, 16 Nov 1999 13:31:15 +0000
Cc: k.briffa@xxx.xx.xx,t.osborn@xxxx.xxx

 Dear Ray, Mike and Malcolm,
Once Tim’s got a diagram here we’ll send that either later today or
first thing tomorrow.
I’ve just completed Mike’s Nature trick of adding in the real temps
to each series for the last 20 years (ie from 1981 onwards) amd from
1961 for Keith’s to hide the decline. Mike’s series got the annual
land and marine values while the other two got April-Sept for NH land
N of 20N. The latter two are real for 1999, while the estimate for 1999
for NH combined is +0.44C wrt 61-90. The Global estimate for 1999 with
data through Oct is +0.35C cf. 0.57 for 1998.
Thanks for the comments, Ray.

Cheers
Phil

Prof. Phil Jones
Climatic Research Unit Telephone +44 (0) xxxxx
School of Environmental Sciences Fax +44 (0) xxxx
University of East Anglia
Norwich Email p.jones@xxxx.xxx
NR4 7TJ
UK

NET-NET,  Save the $15.78 and wait for the sequel!

Posted by Bill Kirk, CEO

US RETAIL RECAP (OCTOBER 2009):  Retail same-store-sales are announced tomorrow – Thursday, November 5^th and the results are likely to blow away Wall Street expectations!  There are many reasons but most of those are due to the coldest, wettest and snowiest October in years which very likely trumped concerns over the economy and unemployment.  We have already heard from some retailers that their overall sales are 5% to 10%+ higher than they originally expected due in large part to exceptional weather and while Wall Street expects sales to be flat we’re expecting industry gains of +1% to +2.5% or better.  WTI research on retail industry same-store sales show the statistically most relevant factors for stronger SSS gains in order of importance are more snow (definitely had that), colder temperatures (had that too), more rainfall (record breaking in some cases) and the least statistically significant is the consumer confidence index.  Here are the top 10 factors impacting retail sales and Fall seasonal merchandise and why the news will be good on Thursday:

1. 2^nd coldest October in 33 years for the nation as a whole and the coldest in 7 years.
2. 1,908 record low temperatures during the month driving strong Fall and Winter sales.
3. The month was -2F colder than last year and every 1F colder brings a +0.7% gain in retail same-store sales just due to colder temperatures driving seasonal sales!
4. Top 5 wettest October in 114 years with +85% more rainfall than last year.
5. Snowiest October in at least 20 years with +126% more snow nationally than last year’s snowy October.
6. Coldest Columbus Day weekend in 9 years – fantastic for Fall seasonal category sales and promotional events.
7. No hurricanes to disrupt store traffic.
8. Gasoline prices relatively flat to last year, only 5% higher than a year ago levels.
9. Consumer Confidence Index was only 48 but that’s actually up over last year’s worst ever index of 38.  While an important measure of how consumers feel about the economy, it has historically not been a good predictor of retail sales in October.  It is a very significant measure from December to March.
10. Retailers are up against a very easy October last year when retail same-store sales were the worst ever at -4.2% according to the International Council of Shopping Centers.

So in this case, the weather report really does belong on the financial page this Thursday!  The news for November may not be as good as seasonal sales were cannibalized into late September and October.  The regional summary chart below shows the weather trends across 8 U.S. regions with the Southeast having the least favorable conditions for cold seasonal merchandise.

U.S. October 2009 Summary Report

U.K. October 2009 Summary Report

G-20 UPDATE:  The G-20 country showing the greatest change toward much warmer weather was the U.K. with a +1.6C warmer month than last year with 28% less rainfall.  Mild and dry extends the garden season but a big negative for Autumn category sales.  Russia by far showed the coldest trends with -2.8C colder conditions than LY with 53% more precipitation.  The map below shows global October temperatures this October 2009 vs 2008.

G-20 October 2009 Summary Report