Yamarone Warns Weather A Red-Herring Amid Deeper Signs Of Slump

Tyler Durden's picture


Blaming the weather for the sullen state of corporate or economic affairs has become a daily occurrence by analysts, pundits and corporate chieftains. However, Bloomberg's Rich Yamarone notes that while there has undoubtedly been a larger-than-normal impact this year, some sub-components of headline indicators suggest underlying weakness without the influence of snowstorms. Sinking economic activity cannot be blamed solely on poor weather, he adds, noting one client's comment that, "If we adjusted for weather, Napoleon would have taken Russia in 1812."

While we have disavowed the muppetry of the weather-blamers (with housing data as the best example that disproves the fallacy), and noted that outlooks have also been reduced (which seems like the surveyed are better weather-forecasters than industry "see-ers", Yamarone notes:

Several indicators last week showed the influence of bad weather, but digging deeper and focusing on sub-components that were not affected by the weather also reveals softer economic conditions.


The National Federation of Independent Business’s Optimism Index (NFIB) fell 2.7 points to 91.4 in February — its lowest reading since March 2013. One sub-component, the NFIB’s “Good Time to Expand” index, fell two points to 6.0 last month. This has nothing to do with weather since it is reflective of expectations three months out, in May.



Restaurant sales, which are very discretionary in nature, inched up 0.3 percent versus January, 2.5 percent from year-ago levels. Adjusting for inflation, the real level of restaurant sales is 1 percent — a very weak posting. A sub-4 percent (nominal) pace has signaled recession in the past.


Of course, the weakness in Q1 GDP is quickly hockey-sticked away by "economist" expectations for the future - just around the corner...

But, as Yamarone concludes:

when attempting to decipher the underlying trends in the economy, it is probably wise to ignore the headlines and focus on those components that are less weather related. Last week’s data imply sustained weakness during the next few months, none of which is likely to be weather related.

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Tue, 03/18/2014 - 13:51 | 4564242 Johnny Cocknballs
Johnny Cocknballs's picture

taken does not mean held.

Tue, 03/18/2014 - 14:49 | 4564537 Herd Redirectio...
Herd Redirection Committee's picture

And here I thought people do YoY comparisons for a reason...

Tue, 03/18/2014 - 15:28 | 4564707 daxtonbrown
daxtonbrown's picture

Oh, The sun will come out! Tomorrow! Tomorrow!

Tue, 03/18/2014 - 13:51 | 4564244 Say What Again
Say What Again's picture

If everyone is shopping on-line, why should the weather matter that much?

Tue, 03/18/2014 - 14:41 | 4564501 John Law Lives
John Law Lives's picture

That may be their next excuse:  The weather in Spring is so nice that people are going to local parks etc. and subsequently delaying on-line shopping until it turns cold again.  That way, they have a built-in excuse for the rest of the calendar year to justify sluggish retail sales data.

Moral of the story:  TPTB will tell any lie convenient to them to keep the party going.


Tue, 03/18/2014 - 15:06 | 4564602 Stuck on Zero
Stuck on Zero's picture

True.  I would change that statement ...


..when attempting to decipher the underlying trends in the economy, it is probably wise to ignore the headlines and focus on those components that are less weather related.


..when attempting to decipher the underlying trends in the economy, it is probably wise to ignore the propaganda.


Tue, 03/18/2014 - 13:52 | 4564253 PlusTic
PlusTic's picture

who fukkin cares, the market is a video game run by people with unlimited cash...who fukkin cares about economics

Tue, 03/18/2014 - 13:54 | 4564263 maskone909
maskone909's picture

$usd near breaking support, dow and spx looks very weak with downward 50dma's and hot war potential in east europe....

Got swan?

Tue, 03/18/2014 - 14:04 | 4564321 chirobliss
chirobliss's picture

Don't know about you but I've been trading the ES all morning, up and down and it certainly doesn't look weak to me.

It should be; by every measure of rationality it should be tanking but the volume that surges in on every up move is just breathtaking.

Tue, 03/18/2014 - 14:06 | 4564337 maskone909
maskone909's picture

I swingtrade so im probably looking at longertime lines. 12 month daily charts as opposed to intradailys

Tue, 03/18/2014 - 13:54 | 4564264 skwid vacuous
skwid vacuous's picture

whatever  - SPX and DJIA dont give a fuck... must be the weather

Tue, 03/18/2014 - 14:01 | 4564310 chirobliss
chirobliss's picture

A seriously WTF?? market.

Announcement that Ukranian soldier is killed, ES leaps 5 points on massive volume.

I've never seen a market so strongly powered up by scared shorts, seriously WTF!!!

Tue, 03/18/2014 - 14:09 | 4564356 insanelysane
insanelysane's picture

War is Peace!

Tue, 03/18/2014 - 13:59 | 4564295 Theta_Burn
Theta_Burn's picture

They changed the name of Air-force1...to Yammer1.?

Tue, 03/18/2014 - 14:17 | 4564398 Spungo
Spungo's picture

Insiders have been jumping ship since summer 2013 therefore insiders are responsible for the polar vortex. Roll out the guillotines! 

Tue, 03/18/2014 - 14:21 | 4564416 Iam Yue2
Iam Yue2's picture

If we adjusted for weather, Hitler would have won The Battle of Stalingrad.

Tue, 03/18/2014 - 14:27 | 4564449 TrumpXVI
TrumpXVI's picture

And the battle for Moscow.

Tue, 03/18/2014 - 15:39 | 4564756 skwid vacuous
skwid vacuous's picture

then people would be saying Hitler was right about a few things...musn't say that - VERY naughty

Tue, 03/18/2014 - 14:28 | 4564453 oklaboy
oklaboy's picture

forecating 14 inches of surf down here in Glveston,  guess those cargo ships anchored off shore loaded (or loading) with goodies haven't heard about the weather. 

Tue, 03/18/2014 - 15:11 | 4564636 deeply indebted
deeply indebted's picture

Red-Herring or not. Perpetually hopeful idiots of all stripes need to ask themselves this question: If we can't beat the weather, then what POSSIBLE chance do we have against Russia, China, India, et al.?

Tue, 03/18/2014 - 19:09 | 4565567 Jack4952
Jack4952's picture

"If we adjusted for weather, Napoleon would have taken Russia in 1812."


Gee! I wish I had said that!!!

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