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Morgan Stanley Defends Retail Sales' Seasonal Adjustments From "Crazy Zero Hedge Analysis"; BAC Upgrades Netflix

Tyler Durden's picture


You heard our side of the story. It is only fair you hear the other side too.

From Morgan Stanley's chief economist, David Greenlaw:

There is some crazy analysis on Zero Hedge that seems to be getting some traction because a few clients have asked about it (see their chart below). 



Basically, ZH claims that a bias in the retail sales seasonal adjustment factor distorted the July results to the high side.  However, they are looking at the dollar adjustment for the level of sales in July alone.  Since the main focus in the retail sales report is on the percent change in seasonally adjusted monthly retail sales, the relevant comparison is the percent change in the seasonal adjustment factor between June and July.  Moreover, calendar effects matter.  For example, the Fourth of July holiday was midweek this year and there were only 4 shopping weekends in July 2012 -- one less than in July of the past few years.  The last time the July calendar was identical to 2012 was in 2007.  So, we show below a comparison of the monthly percent change in the seasonal adjustment factor for 2012, 2011 and 2007.  The bottom line is that seasonal adjustment factor for July 2012 added about 2 percentage points to the monthly change in retail sales -- essentially the same as in July 2007. 



Note:  a positive % ch for the SF subtracts from the NSA change and a negative % ch in the SF adds to the NSA change

* * *

And now you know the Morgan Stanley version of things.

What can we say? In X-12-ARIMA we trust:

A Basic Seasonal Adjustment Glossary

ARIMA models     These are a versatile family of models for modeling and forecasting time series data. Seasonal ARIMA models have a special form for efficiently modeling many kinds of seasonal time series and are heavily used in seasonal adjustment. ARIMA is an acronym for AutoRegressive Integrated Moving Average.

Flow series    Time series measuring consecutive changes over a unit of time, such as monthly sales or monthly cash flows, or monthly changes in any stock series.

Irregular component    This is the residual time series that results from the removal of estimated seasonal and other systematic calendar-related components of an observed time series, along with the removal of an estimated trend-cycle component.

Moving holiday effects    These are systematic changes in the values of a time series that are associated with the timing of moving holidays, i.e. holidays whose dates vary from year to year, such as Easter, Passover, Ramadan, Chinese New Year and U.S. Labor Day. Estimates of one or a combination of such effects define the moving holiday component of time series.

RegARIMA models (Also regression+ARIMA models.)    In the seasonal adjustment context, a hybrid model in which some features of the time series, such as moving holiday, trading day and outlier effects, are modeled with linear regression variables while the remaining features (those of the regression residuals, including trend, cycle and seasonal components) are modeled with a seasonal ARIMA model.

Seasonal adjustment    The estimation of the seasonal component and, when applicable, also trading day and moving holiday effects, followed by their removal from the time series. The goal is usually to produce series whose movements are easier to analyze over consecutive time intervals and to compare to the movements of other series in order to detect co-movements.

Seasonal component    A time series whose values quantify (usually in percents or in the units of data measurement, e.g. dollars) variations in the level of the observed series that recur with the same direction and a similar magnitude at time intervals of length one year. (Length is measured in the calendar units of the observed series--usually quarters or months, sometimes semesters, weeks, or other units.)

SEATS (Signal Extraction in ARIMA Time Series)    This approach is used within TRAMO-SEATS and also within the X-13A-S seasonal adjustment packages. It can simultaneously estimate the different components of a time series.

Stock series    For the unit of time of the series, months for example, these are time series like end-of-month inventories that arise as the cumulative sum of inflows and outflows (i.e. monthly net flows) starting from some initial value in the past.

Time series    A sequence of measurements of an economic (or other) variable made at approximately equally spaced times. It is important that the definition of the variable and the method used to measure it be consistent over time.

Trading day effects     As practical concerns, these are systematic effects in monthly times series related to changes in the day-of-week composition of each month and, in some cases, also to changes in the length of February. For flow series (monthly accumulations of daily activity e.g. monthly sales), the increases or decreases from average day-of-week activity associated with the days that occur five times in the month in a given year are important. (If they are days of high sales volumes, the monthly value will be inflated, etc.) For flow series, the length of February can have an impact. (More days than average should produce more sales than average for February.) For stock series, such as end-of-month inventories, the extent to which inventories tend to rise or fall on the day of measurement (e.g. the last day of the month) can have an impact that is different from year to year. Attempts to measure analogous effects in quarterly series are seldom successful. A series of estimated trading day effects defines a trading day component for the time series.

TRAMO (Time Series Regression with ARIMA noise)     This approach is used within TRAMO-SEATS seasonal adjustment sofware. It is an approach to estimate and prior correct time series before seasonal adjustment.

TRAMO-SEATS     Seasonal adjustment software developed by the Bank of Spain. It uses models to estimate the different time series components.

Trend-cycle component     This is an estimate of the local level of the time series that is expected to include the effects of moderately short- and well as long-term movements associated with the "business cycle". It is often obtained by applying a customized smoothing procedure (a data-dependent "trend filter") to the seasonally adjusted series to suppress its oscillatory movements over short time intervals, i.e. its higher frequency movements.

X-11     Seasonal adjustment software originally developed by United States Census Bureau. It is based on an iterative application of linear filters.

X-11-ARIMA     A Seasonal adjustment software developed by Statistics Canada. It incorporates ARIMA modelling to improve estimation of the different time series components.

X-12-ARIMA     A Seasonal adjustment software developed by the United States Census Bureau. It incorporates regression techniques and also ARIMA modelling to improve estimation of the different time series components.

X-13-ARIMA-SEATS (X-13A-S)     Seasonal adjustment software under development at the U. S. Census Bureau in collaboration with the Bank of Spain that integrates an enhanced version of X-12-ARIMA with an enhanced version of SEATS to provide both X-11 method seasonal adjustments and ARIMA model-based seasonal adjustments and diagnostic.

* * *

In other news, Bank of America just upgraded Netflix from Neutral to Buy with the following logic:

More potential upside than downside; maintaining $72 PO


We are maintaining our $72 price objective based on a sum-of-the-parts (SOP) analysis. Our SOP assigns a 20x multiple to the domestic streaming segment, a 6x multiple to the domestic DVD segment and gives no credit for the international streaming segment. As shown in Exhibit 2, we see a theoretical upside and downside case of $30 and $117 by using the lowest and highest multiples and contribution margins we believe are reasonable, respectively.


Bears have valid concerns…


Bears are primarily concerned about: 1) the likelihood that content prices will be increasing due to Netflix’s exclusive and original content emphasis, which could pressure the streaming bottom line; 2) international will likely suck up consolidated global profitability for years and this is too long to wait in a rapidly changing industry; 3) increasing competition both domestically and internationally; 4) unproven  longterm domestic streaming segment profitability; and 5) rapidly declining domestic DVD profit as the most profitable customers churn off the service.


…but Bull arguments more convincing to us


The bulls are mainly positive about: 1) continued international expansion being a drain on future profits but the right long-term strategic business decision; 2) Netflix becoming better at buying content and eliminating wasted spend as it analyzes audience viewership trends and historical data – likely increasing bottom line streaming profitability; 3) domestic earnings are becoming significant and Netflix can benefit from being the first mover in numerous international countries; and 4) at point of or beyond incremental domestic streaming segment profitability.

In other words, even the bulls admit the company will not make money, but at least it is the best thing they can hope to achieve. After all, who needs cash anyway. Just copy the AMZN model of ever lower gross profits resulting in an ever higher stock price as the former bookseller morphs into a bank-space station-precious metal miner-cloud gamer-retailers' retailer-[everything else you have never imagined].


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Tue, 08/14/2012 - 14:38 | 2704533 Gene Parmesan
Gene Parmesan's picture

Comedy - from the chief economist at MS no less!

Tue, 08/14/2012 - 14:40 | 2704545 NotApplicable
NotApplicable's picture

First they ignore you...

Tue, 08/14/2012 - 14:45 | 2704577 ParkAveFlasher
ParkAveFlasher's picture

...and then they laugh at you...

Tue, 08/14/2012 - 14:52 | 2704608 MillionDollarBonus_
MillionDollarBonus_'s picture

... meanwhile the 10 year continues to trade well below 2%, the VIX is trading at an optimistic 14.32, and the S&P continues its summer rally with another daily close above 1400. The economic fundamentals are so strong now that only the most bitter and masochistic ZH day traders remain bearish. It’s sad that the ZH readership is unable to see the green shoots in the economy, despite the overwhelming positive economic fundamentals.

Tue, 08/14/2012 - 14:58 | 2704639 azzhatter
azzhatter's picture

you should leverage your entire family and buy buy buy

Tue, 08/14/2012 - 15:20 | 2704731 nope-1004
nope-1004's picture

Geithner heads the Treasury.  Like hell I'll buy anything he's associated with.


Tue, 08/14/2012 - 15:44 | 2704825 ndotken
ndotken's picture

Figures lie and liars figure ... it's been that way since math was invented

Tue, 08/14/2012 - 15:44 | 2704823 Stoploss
Stoploss's picture

"Bank of Spain"

"US Census Bureau"

The fucking thing is so broken, add in the leap year, move the holiday forward, and voila'! July Beat!!

Modify it until it shits skittles and tangerines. Never mind next year.

Tue, 08/14/2012 - 16:03 | 2704885 gmrpeabody
gmrpeabody's picture

Sure... why not? Then we can average in July 2007 (probably the single best retail month EVER) and sprinkle a little of this-here dust..., and TA DUHHHH!

This shit is easy!

Tue, 08/14/2012 - 15:00 | 2704649 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Robot Trader does this schtick.  You better find a day job.

Tue, 08/14/2012 - 15:21 | 2704730 I Am Not a Copp...
I Am Not a Copper Top's picture

MDB always getting bashed!  Keep speaking the truth brother!


And yes I was kidding

Tue, 08/14/2012 - 15:58 | 2704870 hungrydweller
hungrydweller's picture

So was he.  /sarc continually on with MDB

Tue, 08/14/2012 - 15:24 | 2704747 sitenine
sitenine's picture

"overwhelming positive economic fundamentals" - idiot. Your 'contrarian' comments aren't nearly as funny as you seem to think they are. Different day, same troll...

Tue, 08/14/2012 - 15:26 | 2704757 bagehot99
bagehot99's picture

The 'economic fundamentals' of which you speak, are totally unrelated to the S&P500 and the VIX and other MARKET data.

Economic fundamentals are liquidity, credit availability in the real economy, commodity prices, order books, consumer sentiment etc., etc., etc.. All of which are in the fuckng toilet.

Change your handle to Million Dollar Bullshitter, and thus be at least an honest little Obamatron.


Tue, 08/14/2012 - 15:32 | 2704779 Inibo E. Exibo
Inibo E. Exibo's picture

Don't ever change.

Tue, 08/14/2012 - 18:35 | 2705205 Surrealist
Surrealist's picture

LOL I love reading this comedic commentary! Nothing like a good laugh now and again.

Tue, 08/14/2012 - 14:53 | 2704615 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

....and then you find them on a dark alley coughing up blood.

Tue, 08/14/2012 - 14:58 | 2704640 fuu
Tue, 08/14/2012 - 15:04 | 2704654 Miss Expectations
Miss Expectations's picture



Tue, 08/14/2012 - 15:07 | 2704683 Tijuana Donkey Show
Tijuana Donkey Show's picture

Then MDB trolls you.....

Tue, 08/14/2012 - 15:18 | 2704722 ParkAveFlasher
ParkAveFlasher's picture

...And then you win. 

Tue, 08/14/2012 - 15:22 | 2704742 NotApplicable
NotApplicable's picture

That'll teach me for putting a post seeking a reply on the initial thread-jack comment.

Tue, 08/14/2012 - 14:46 | 2704586 Mark Carney
Mark Carney's picture

thank you MS for clearly pointing out the obvious you douchebags that you in fact read ZH all day everyday and probably base many trades off of TD's analysis.


Oh and tell Bernak, FUCK YOU

Tue, 08/14/2012 - 15:05 | 2704671 TruthInSunshine
TruthInSunshine's picture

I've just spent the better part of 35 minutes dissecting the analysis presented by ZH in making the case that the retail sales number was significantly skewed to the upside, by what appears to be nothing less than an extreme, and maybe unprecedented, BLS adjustment of the infamous "seasonal adjustment" variety.

At this point, I am leaning towards accepting ZH's analysis of the retail sales datum as closer to the reality versus that of the BLS, but keeping an open mind in the event I'm 'missing something.'

Summary:  I believe there's better reason than not to believe the BLS either intentionally or unintentionally significantly overstated July retail sales numbers.

Be on guard, Muppets of Morgan Stanley, JP Morgan & Goldman Sachs. Are you men & women, or are you Muppets?

Tue, 08/14/2012 - 15:08 | 2704689 Tijuana Donkey Show
Tijuana Donkey Show's picture

Every muppet dies, but not every muppet truely lives

Tue, 08/14/2012 - 15:21 | 2704737 Almost Solvent
Almost Solvent's picture

Thanks for the coffee I just snorted over my keyboard . . .

Tue, 08/14/2012 - 17:19 | 2705054 FMR Bankster
FMR Bankster's picture

I wouldn't be suprised if we see other data sets follow the pattern we now see every week in unemployment claims. Always adjusted in a worse way when the attention is focused on the new number. Note June retail sales were revised lower at the same time July's number exceeded expectations.

Tue, 08/14/2012 - 15:43 | 2704820 Ghordius
Ghordius's picture

thank you TIS, I spent 10 minutes and my head still hurts a bit.

One correction, though. A Master (of the Universe) is never a Muppet. Until he retires and loses touch, that is. Than he is "just a rich man", ergo a Muppet, ergo someone to fleece. The fleecing might be more subtle from the usual retail one, and he gets a bone, from time to time.

Or he speaks up and requests that the Muppet-Shield-Laws he destroyed are brought back online.

Tue, 08/14/2012 - 14:47 | 2704589 Mark Carney
Mark Carney's picture

thank you MS for clearly pointing out the obvious you douchebags that you in fact read ZH all day everyday and probably base many trades off of TD's analysis.


Oh and tell Bernak, FUCK YOU

Tue, 08/14/2012 - 14:52 | 2704609 spastic_colon
spastic_colon's picture

Methinks MS just F'd with the wrong ZH

Tue, 08/14/2012 - 14:52 | 2704611 ndotken
ndotken's picture

"Seasonal adjustment software under development at the U. S. Census Bureau in collaboration with the Bank of Spain"

When did the BofS become a statistical forecasting guru? That statement tells me everything i need to know

Tue, 08/14/2012 - 15:37 | 2704798 Matt
Matt's picture

Stealth bailout? Send a couple hundred billion $ over to the Bank of Spain in exchange for their contribution to the Seasonal Adjustment software?

Tue, 08/14/2012 - 15:08 | 2704690 smlbizman
smlbizman's picture

...and thanks to the zero hedge crazies, we were aware of the joke that gm, grpn, fb, zyng, 

so with all due respect ill stick with the crazies, they are more trustworthy than thieves.....

Tue, 08/14/2012 - 14:41 | 2704548 vast-dom
vast-dom's picture

If you are still MS client you deserve the muppet raping that you have been getting!

Tue, 08/14/2012 - 14:46 | 2704584 NotApplicable
NotApplicable's picture

I'm having a hard time wrapping my head around the idea that MS clients can operate a phone, let alone read ZH.

Okay, so which one of you told them?

Tue, 08/14/2012 - 14:57 | 2704633 vast-dom
vast-dom's picture

it was operation mayhem : one of the many TD's pretended to be MS client and called it in. 

MS use ZH to trade while telling "clients" to do opposite : between that spread and their free fed money then cook the books for "profits" -- it's quite amazing how few days the "big boys" have in the red. they seem to have winning trade days like 98% of the time -- if it's too good to be true it must be fed induced SEC backed Ponzi market. 

Tue, 08/14/2012 - 16:24 | 2704929 TruthInSunshine
Tue, 08/14/2012 - 14:57 | 2704636 i_call_you_my_base
i_call_you_my_base's picture

Their AOL browsers have text-to-speech.

Tue, 08/14/2012 - 14:59 | 2704644 azzhatter
azzhatter's picture


Tue, 08/14/2012 - 15:37 | 2704801 Nobody For President
Nobody For President's picture

Even on ZH, there are few LOL posts - but this was one of them!


Tue, 08/14/2012 - 15:08 | 2704694 BooMushroom
BooMushroom's picture

I've been reading ZH enough to know perfectly well what that means.  But I still can't get out of my head the image of Gonzo and Beaker having their way with Miss Piggy.

Tue, 08/14/2012 - 15:22 | 2704743 Things that go bump
Things that go bump's picture

Oh dear, I'm afraid you have infected me with that image.  I'm quite traumatized.

Tue, 08/14/2012 - 14:47 | 2704591 FL_Conservative
FL_Conservative's picture

Figures lie and liars figure.

Tue, 08/14/2012 - 14:48 | 2704595 slaughterer
slaughterer's picture

MS 0 : ZH $$$

Tue, 08/14/2012 - 15:13 | 2704707 LoneStarHog
LoneStarHog's picture

Sheesh!  I went from the church (ZH) across the street to the whore house (MS) and now have to go back to the church (ZH) and beg for forgiveness.

Tue, 08/14/2012 - 16:03 | 2704883 exi1ed0ne
exi1ed0ne's picture

The church is close, but the road is icy
The bar is far, but I will walk carefully

Tue, 08/14/2012 - 15:18 | 2704720 LoneStarHog
LoneStarHog's picture

"...a few clients have asked about it..."

Hey, MS, in this case "few" is a euphemism for ALL, which is probably how many dumbasses still use the WHORE STREET firms.

Tue, 08/14/2012 - 15:18 | 2704721 I Am Not a Copp...
I Am Not a Copper Top's picture

Love it


Tue, 08/14/2012 - 15:47 | 2704840 Imminent Collapse
Imminent Collapse's picture

MS, the first day, you have to fight.  Welcome to Fight Club, Bitchez!

Tue, 08/14/2012 - 14:40 | 2704540 Christoph830
Christoph830's picture

Haha.  No comment on ZH article about MS IPOs of GRPN, ZNGA, FB?  THE SILENCE IS DEAFENING!



Tue, 08/14/2012 - 14:45 | 2704578 Tyler Durden
Tyler Durden's picture

Are you referring to this chart? We are currently seasonally adjusting it to make all the catastrophic Morgan Stanley IPOs appear profitable. Stay tuned.

Tue, 08/14/2012 - 14:47 | 2704588 slaughterer
slaughterer's picture

That MS IPO graph looks like the chart on my ZH "Short's Dream" T-shirt.  

Tue, 08/14/2012 - 22:32 | 2705718 TruthInSunshine
TruthInSunshine's picture

I can't wait until The Winners of the New World version 2.0 is released!





Tue, 08/14/2012 - 22:34 | 2705722 TruthInSunshine
TruthInSunshine's picture

Tulips,, housing & Zynga/PCLN, oh my!

Tue, 08/14/2012 - 14:47 | 2704593 dwdollar
dwdollar's picture

No doubt the parameters for adjusting that will be kept secret.

Tue, 08/14/2012 - 14:52 | 2704600 NotApplicable
NotApplicable's picture

I hear they're planning on making it up on volume.

Hey Tyler, any plans on running a story on the Sentinel Ruling (or did me and the Googlez miss it?)?

And if you missed it, here's Ann's take.

Tue, 08/14/2012 - 15:31 | 2704771 Alea Iactaest
Alea Iactaest's picture

Yes, please.

Tue, 08/14/2012 - 15:08 | 2704675 vast-dom
vast-dom's picture

ms douchebag: "uh sorry muppets we will be closing out of uh some positions due to.....uh....we really care about you, we really do but uh past performance does not guarantee......we just issued strong buy for fuckbook-- that's fb to you muppet uh muppet dumb muppet midwest muppet farmer muppet muppet....."

Tue, 08/14/2012 - 15:10 | 2704702 chart_gazer
chart_gazer's picture

surely you will use X-12-ARIMA to make the adjustments

Tue, 08/14/2012 - 15:22 | 2704745 JohnG
JohnG's picture


Tue, 08/14/2012 - 15:38 | 2704805 You Didn't Buil...
You Didn't Build That's picture

nosedive ...looks eerily similar to the purchasing power of the dollar...oddly.

Tue, 08/14/2012 - 15:43 | 2704818 Arnold Ziffel
Arnold Ziffel's picture

the graph can represent many cliffs approaching (and the subsequent fall). Here is one from a blogger in The Middle Kingdom:


Fear about where China is heading seems to be a topic a lot of expats are worried about at the moment. There is talk here of the US “falling off a financial cliff,” but right now I think China is closer to the edge of that cliff, and that’s it’s also a steeper cliff than ours.....The result is the biggest property bubble in history [in China], which when it pops will sound like a thousand firework accidents.


"Honey, lets have peking Duck tonighgt fo dinner. What'd ya say?"

Tue, 08/14/2012 - 17:01 | 2705015 SheepDog-One
SheepDog-One's picture

Poor ol' Margin Stanley....spent months on the 'QE imminent' bandwagon hoping for some free monies but now decides to jump onto the 'good news everyone!' bandwagon? I ask people I meet 'Do you work at Margin Stanley or do you just dress like a retard?'

Tue, 08/14/2012 - 17:26 | 2705069 WillyGroper
WillyGroper's picture

Winning, duh!

Tue, 08/14/2012 - 17:32 | 2705078 onebir
onebir's picture

If someone had invested $1000 in GRPN, then switched to ZNGA at the IPO, then FB, how much would it be worth now?

And, as a matter of interest, how much would MS have made in fees on those excellent investments? (Ignoring mark2myth losses sitting in an SPV somewhere, cos they won't be affecting anyone's bonuses...)

Tue, 08/14/2012 - 14:40 | 2704544 Bastiat009
Bastiat009's picture

Can I seasonally adjust my taxes?

Tue, 08/14/2012 - 14:42 | 2704555 NotApplicable
NotApplicable's picture

First adjustment question: so... what's a dollar?

Tue, 08/14/2012 - 15:03 | 2704661 Skateboarder
Skateboarder's picture

Once upon a time about 1.5 to 1.6 grams of gold. Now, a mini bottle of HFCS-laden Coca Cola, or three packs of Top Ramen, or half a pound of GMO tomatoes on sale, etc.

Oh yeah, forgot to mention the pseudofood on the dollar menu.

Tue, 08/14/2012 - 15:08 | 2704693 buckethead
buckethead's picture

A promisary note for which you exchange crude. It has proven to be a means of surviving "popular uprisings" which can result in termination.

Tue, 08/14/2012 - 14:41 | 2704546 Azannoth
Azannoth's picture


Tue, 08/14/2012 - 14:46 | 2704582 slaughterer
slaughterer's picture


Tue, 08/14/2012 - 14:41 | 2704547 not fat not stupid
not fat not stupid's picture

Those MS MF's can KMA

Tue, 08/14/2012 - 14:41 | 2704551 jcaz
jcaz's picture

Dave, you better step out of your cubicle in the basement, hold onto your red stapler, and get some fresh air-  your analysis doesn't jive.....

Tue, 08/14/2012 - 14:43 | 2704552 Stackers
Stackers's picture

MS watercooler chat

MS broker #1: God damn it !. One of my sheep sent me another God damn link to another Zerohedge artcl.

Dont these ass-wipes know they are ruining it for everyone ?

MS broker #2: Tell me about it. One of my fucking sheep started rambling about the immorality of fractional reserve banking the other day.

Jesus H. christ this is going to screw everything up.

Tue, 08/14/2012 - 14:42 | 2704556 GMan_
GMan_'s picture

no no Margin Stanley is pissed that they actually had to do some work today to defend their pumps against some serious truth about the stocks they keep pumping. if ZH wasn't there, MS would be busy watching Debbie Does Dallas with their buddies over at the SEC and the Treasury.

Tue, 08/14/2012 - 14:43 | 2704567 fuu
fuu's picture

There are no trannies in Debbie Does Dallas.

Tue, 08/14/2012 - 16:52 | 2704997 toothpicker
toothpicker's picture

And just one midget

Tue, 08/14/2012 - 15:24 | 2704749 canardo
canardo's picture

Is that a sports movie?

Tue, 08/14/2012 - 15:38 | 2704802 Solon the Destroyer
Solon the Destroyer's picture

...Well, it does drop the odd jock.

Tue, 08/14/2012 - 14:42 | 2704557 PSEUDOLOGOI


Tue, 08/14/2012 - 14:42 | 2704561 101 years and c...
101 years and counting's picture

clearly, the economy is humming along like it was in 2007 with new home sales at 1.6 million vs 320k and new car sales were 18 million vs current 14 million.



Tue, 08/14/2012 - 14:43 | 2704563 lincolnsteffens
lincolnsteffens's picture

Any time you need to explain why a fact has to be modified based on invented parameters to give a more accurate meaning to a fact, well.... you loose!

Tue, 08/14/2012 - 15:42 | 2704819 Catch-22
Catch-22's picture

...95% of all statistics are made up... 


Tue, 08/14/2012 - 17:57 | 2705113 jumbo maverick
jumbo maverick's picture

4 out of 5 statisticians approve of your comment

Tue, 08/14/2012 - 14:43 | 2704565 Silver_K-9
Silver_K-9's picture

So it was a once in a 4 year uptick?!

Tue, 08/14/2012 - 14:43 | 2704566 Hohum
Hohum's picture

MS dude, just tell me the not seasonally adjusted year over year.  K?

Tue, 08/14/2012 - 14:44 | 2704571 Jlmadyson
Jlmadyson's picture

Can't wait to see the spin on August because they will need it.

Tue, 08/14/2012 - 14:58 | 2704597 Abraxas
Abraxas's picture

Wow! Is this article for real? If so, these people at MS have waisted little brain power they had on cocaine and whores. Please tell me it's a joke.

Tue, 08/14/2012 - 14:49 | 2704598 monad
monad's picture

You're either with us or you're against us. Now get on the crazy train and we'll let it slide.

Sorry. Uh, sorry. I, I, I got a little agitated. The thought of, uh, escape had crossed my mind, and then suddenly - suddenly - suddenly I felt like bending the fucking bars back, and ripping out the goddamn window frames and eating them - yes, *eating* them! Leaping, leaping, leaping! Colonics for everyone! All right! You dumbasses. I'm a mental patient. I'm *supposed* to act out! Wait'll you morons find out who I am! My father's gonna be really upset, and when my father gets upset, the ground SHAKES! My father is God! I worship my father!

Tue, 08/14/2012 - 14:55 | 2704621 Abraxas
Abraxas's picture

Brilliant! Psychedelic and ADD-d, but brilliant.

Tue, 08/14/2012 - 15:42 | 2704817 ThirdWorldDude
ThirdWorldDude's picture

Straight outta Tyler's mouth in "12 Monkeys"...

Tue, 08/14/2012 - 14:49 | 2704599 Clowns on Acid
Clowns on Acid's picture

Dave is pissed that ZH exposed his analysis as essentiallty a 3 card monte Forget X-12-ARIMA....


Tue, 08/14/2012 - 15:14 | 2704711 BooMushroom
BooMushroom's picture

It sure takes a lot of words to explain to a bitter-clinger like my why it's a GOOD idea to touch the hot stove again.

Tue, 08/14/2012 - 14:51 | 2704601 cougar_w
cougar_w's picture

Oh! In your face Morgan-Stanley! U r skooled luzers!

Now watch, MS will shoot back with a missive about why X-12-ARIMA is just plain wrong.

And we even have Morgan & Stanley fiction!

The truth, fuckers. Learn to live with it.

Tue, 08/14/2012 - 14:52 | 2704612 BudFox2012
BudFox2012's picture

Being chastised by someone from Moron Stanley about getting your facts wrong... ha ha ha.... that's a good one... where do you come up with these jokes!  Oh wait, you were serious?

Tue, 08/14/2012 - 14:53 | 2704613 citrine
citrine's picture

Are they arguing with Bloomberg Professional as well?

 RSTUTOTL Index - Total Unadjusted Retail Sales for July 2012 is $401.988bln as opposed to $405.82bln a month ago. 

Tue, 08/14/2012 - 14:53 | 2704614 ThisIsBob
ThisIsBob's picture

I think I've got it.  Sales sucked, but when you think about it, they didn't.

Tue, 08/14/2012 - 14:53 | 2704616 lasvegaspersona
lasvegaspersona's picture

oh yeah, I had an extra beer....cuz the 4th was on a Wednesday...??

In the near future we will be given no numbers at all. only the direction and the excuses.... cuz numbers is too hard....we should just get the message and not bother about how the answer was obtained.

Tue, 08/14/2012 - 14:55 | 2704626 centerline
centerline's picture

Umm, color me stupid, but how could the adjustment factor be negative for 2007 and 2011 and 2012 - but only in 2012 does this result in an upward revision?

Tue, 08/14/2012 - 15:15 | 2704715 BooMushroom
BooMushroom's picture

Because fuck you, that's why.

Tue, 08/14/2012 - 15:26 | 2704758 centerline
centerline's picture

+1 for you.  Honesty is hard to come by these days!  

Tue, 08/14/2012 - 17:21 | 2705056 onebir
onebir's picture

Those -ve adjustment factors are given in terms of the month on month percentage changes in retail sales.

The 'July 2012 upward revision' (from the blue ZH chart right?) is the seasonal adjustment to the *level* of retail sales in July. You can have a -ve adjustment to the monthly change at the same time as a +ve adj to the level if there was a big enough +ve adj to the level in the previous month.

(It IS confusing... And I'm not sure MS has got their seasonal factors 'the right way up' - usually seasonal factors are what you multiply the NSA numbers by to get the SA numbers. But they appear to be right in pointing out the effect on the monthly change is about the same as it was the last few times the shopping day layout in the month was about the same.)

Tue, 08/14/2012 - 14:56 | 2704628 haskelslocal
haskelslocal's picture

MS is to busy seasonally adjusting their tar tar.

Tue, 08/14/2012 - 14:58 | 2704637 Meesohaawnee
Meesohaawnee's picture

so wait. let me get this straight. Isnt this the same ass clowns that brought us FB? its just getting comical like anyone listens to these criminals anymore. Or ever did.

Tue, 08/14/2012 - 14:57 | 2704638 Rayfp65
Rayfp65's picture

Lee Adler has a piece on the retail sales # as well, and pretty much in agreement with Zerohedge....Lackluster #'s if you dig down under the headline #!!!!

Tue, 08/14/2012 - 14:59 | 2704645 Meesohaawnee
Meesohaawnee's picture

oh and btw. how much did back get in bribes to upgrade trashflix? whats it worth? few hundred k?

Tue, 08/14/2012 - 15:00 | 2704650 Stuart
Stuart's picture

Did anyone remove gasoline sales from the data?  hmm...


Tue, 08/14/2012 - 15:02 | 2704657 Conman
Conman's picture

Greenlaw is jsut anotehr CNBC airtime loving permabull. He also went on every finnews show in '11 talkign about no downgrade for US.

Tue, 08/14/2012 - 15:02 | 2704658 monopoly
monopoly's picture

How do they do that. Beyond words. 

Tue, 08/14/2012 - 15:03 | 2704663 max2205
max2205's picture


Tue, 08/14/2012 - 15:04 | 2704666 mike904
mike904's picture

I find it a little odd that you can have one year with pos seasonal adjustment in ten. 



Tue, 08/14/2012 - 15:06 | 2704678 Global Hunter
Global Hunter's picture

reading the MS stuff, my eyes just glaze over and mind starts to wander.

Tue, 08/14/2012 - 15:31 | 2704774 NotApplicable
NotApplicable's picture

See, I told you people that MS provided value!

MS, curing insomnia one report at a time thanks to state-of-the-art, world-class sophistry.

Tue, 08/14/2012 - 15:06 | 2704679 Antifaschistische
Antifaschistische's picture

Well MS, if it's all part of the formula, then post the formula!   Let's see the formula that's being used to calculate all teh seasonal adjustments then we can just run it ourselves.   There's no need for this to be secret...unless, insiders are being allowed to front run based on VIP leaks, but we know that would never happen, so just publize the damn formula.

Tue, 08/14/2012 - 15:09 | 2704695 HD
HD's picture

Zero Hedge is a force to be reckoned with. I can't tell you how many times CNBC plays catch up hours or days after a story is posted on ZH.

Think about it - Morgan Stanly feels it necessary to respond to "some fringe blog".  One has to wonder how many expletives are used before the name Zero Hedge on any given day on the Street.

Tue, 08/14/2012 - 15:36 | 2704794 NotApplicable
NotApplicable's picture

Or better yet, watching CNBC try to put the lip-stick on the piggy a few minutes after seeing ZH slaughter it.

(I don't watch them anymore, but their mobile "alerts" are true comedy gold.)

Tue, 08/14/2012 - 16:10 | 2704909 onebir
onebir's picture

I think MS have made a good point in this case (albeit not as clearly as they might have).

ZH also deserve credit for publishing this - without calling anyone else crazy.

Tue, 08/14/2012 - 15:09 | 2704697 houserich
houserich's picture

Please excuse me while I try to understand the argument. MS points out 2007 and 2012 have the same calendar layout - I get that.  It has a similar SA, -1.96 vs -2.17, fine. Now on the ZH chart, the $ adjustment has a delta of $5,067. And so if 2007 was a "bonanza" -, then shouldn't 2012 be "orgasmic"?

Tue, 08/14/2012 - 15:09 | 2704699 azzhatter
azzhatter's picture

I would expect sales to be a little lower with 4th of July on a Wednesday- no extended weekend for the endentured servants. But the adjust is ludicrous. Just give us the raw fucking numbers, not some bullshit model adjustments

Tue, 08/14/2012 - 15:18 | 2704723 BooMushroom
BooMushroom's picture

Sorry, we didn't keep the unadjusted numbers.  Just trust us, market warming growth is real.

Tue, 08/14/2012 - 15:10 | 2704700 RunningMan
RunningMan's picture

I would be interested to see what was analyst reaction to retail sales in late 2007 and early 2008 before TSHTF in September. There are some eerie similarities between now and early 2008. Including the fact that work has basically stopped. Last time this happened, the world nearly collapsed. Bodes poorly for the next quarter.

Tue, 08/14/2012 - 15:10 | 2704701 debtor of last ...
debtor of last resort's picture

When ZH is 'seasonally adjusted', the SHTF. Lying TBTB's are NO party for ZH. But maybe ZH is going to be a "systemic risk".

Tue, 08/14/2012 - 15:16 | 2704716 bnbdnb
bnbdnb's picture

USA - where 1.1 million jobs are added, and only 500k more people are working.

Wed, 08/15/2012 - 06:44 | 2704717 TWSceptic
TWSceptic's picture

There is some crazy analysis on Zero Hedge that seems to be getting some traction because a few (clients) muppets have asked about it (see their chart below).



Tue, 08/14/2012 - 15:20 | 2704732 bnbdnb
bnbdnb's picture

Yep, July 2007. I remember those summer months....and the months immediately following...

Tue, 08/14/2012 - 15:22 | 2704744 chistletoe
chistletoe's picture

Well, we are so blessed that Morgan Stanley has made this excellent, detailed analysis.


the markets were green all day until this came out .....wonder why?

Tue, 08/14/2012 - 15:23 | 2704748 Seasmoke
Seasmoke's picture

what seems to be the problem .............2012 IS 2007 ALL OVER AGAIN !

Tue, 08/14/2012 - 15:26 | 2704759 Satan
Satan's picture

The muppets are growing restless...

Tue, 08/14/2012 - 15:33 | 2704784 franzpick
franzpick's picture

MS: From $70 to $14/sh in 5 easy, 1 year, steps.

Tue, 08/14/2012 - 15:43 | 2704821 Alea Iactaest
Alea Iactaest's picture

MUFJ does not want to be reminded.

Tue, 08/14/2012 - 15:45 | 2704829 bubbleburster
bubbleburster's picture

I wanted to upload a Thomson/Reuters chart on MS but I cannot figure out how to do this.  Anyone know how?

Tue, 08/14/2012 - 15:34 | 2704785 You Didn't Buil...
You Didn't Build That's picture

Kohl's, which is one of the morelively stores aorund here, is even looking at lower revenue. People are simply not buying c-r-a-p unless it;s reduced 60-90%.


Kohl's 1Q Profit Drops 23%, Outlook Tepid



...and Q2 does not look much better according to Kohl's CEO. Places like JC Penny's, Sears, etc are holding on by a string thinner then Kim Kardashian's G-string.



Tue, 08/14/2012 - 16:29 | 2704958 sdmjake
sdmjake's picture

Actually I bought two more magazines for the AR15 this week... and picked up a nice tactical bag this very morning. None of it was on sale... so I'm helping the economy.

But I hear ya---

Tue, 08/14/2012 - 15:37 | 2704795 Solon the Destroyer
Solon the Destroyer's picture

double post

Tue, 08/14/2012 - 15:37 | 2704797 bubbleburster
bubbleburster's picture

"Do we control our destiny, or do unseen forces manipulate us?"

Sound of immense laughter.

Tue, 08/14/2012 - 15:37 | 2704799 bart.naf
bart.naf's picture

July 2011 SA data, pre release, was $389,934 and after was $387,932. That moved the annual change rate up to 4.1% from 3.6%.


Also, the last 6 months of annual change rate data from RRSFS, the Fed's inflation adjusted retail sales data:


3.8% 3.6% 3.0% 3.4% 2.5% 2.8%



Tue, 08/14/2012 - 15:41 | 2704814 Centurion9.41
Centurion9.41's picture

"The last time the July calendar was identical to 2012 was in 2007.  So, we show below a comparison of the monthly percent change in the seasonal adjustment factor for 2012, 2011 and 2007.  The bottom line is that seasonal adjustment factor for July 2012 added about 2 percentage points to the monthly change in retail sales -- essentially the same as in July 2007. "

If you can read this and come away thinking that Economics and Wall Street analysis such as this is anything other than marketing that hangs the monkier "scientific process" around its neck for credibility, there's a bridge in NYC I'd like to sell you.

This is classis Emperor has no clothes data games.  The data set is so small, and the comps to markets and conditions so different that to assert the claims stated is either grave ignorance or willful lying. 

But the lemmings and Sheeple keep coming to the mud hole to drink from it....

Hence my lack of sympathy for those who study of math and science ended in high school.  FYI, all you "business majors" out there, you didn't study math.  You were taught a couple of equations and how they should look if properly curve fit.  That's not studying math, that's drinking Kool-Aid and selling it like a kid on the curb.

Tue, 08/14/2012 - 15:46 | 2704833 Alea Iactaest
Alea Iactaest's picture

The mudhole? Isn't there where all the predators hang out?

Go into the wilds of Africa and the guides have a name for Implalas: McDonald's. Just a meal on the hoof.

Tue, 08/14/2012 - 20:41 | 2705469 Centurion9.41
Centurion9.41's picture

Yep, hence my choice of words.

Tue, 08/14/2012 - 15:41 | 2704816 the not so migh...
the not so mighty maximiza's picture

MS, Put that goverment teet back in your mouth and shut the fuck up.

Tue, 08/14/2012 - 15:45 | 2704830 Arnold Ziffel
Arnold Ziffel's picture

You mean it's those crazy paranoid conspiracy theorists over at Morgan, again?

Tue, 08/14/2012 - 15:46 | 2704834 Nobody For President
Nobody For President's picture

A resounding boost for ZH credibility with this ringing endorsement from MS. Also a tremendous boost for the market shorts - as soon as this was released the markets starting tanking.

Thank you again MS for letting ZH kill you with facts. The muppets are getting restless as hell.

Thank you again Tyler(s) for being the fastest, bestest truth to power in the financial world today. 

Tue, 08/14/2012 - 15:47 | 2704837 Tsar Pointless
Tsar Pointless's picture

If you are no longer dazzled by their brilliance or baffled by their bullshit, is it safe to say that you are bedazzled by their ebullience?

May one say that? More importantly, may I say that?

Or is it all pointless?

Tue, 08/14/2012 - 15:48 | 2704838 rtalcott
rtalcott's picture

What are they 80% confidence limits on ALL these numbers?  Any numbers derived from data that don't have error bars are probably case you cannot determine if they are crap or not.  I'm asking for 80% because 95% would be plus or minus infinity.

Tue, 08/14/2012 - 15:53 | 2704857 Bones265
Bones265's picture

MS using new Knight's super algo!


Tue, 08/14/2012 - 15:59 | 2704873 JR
JR's picture

Once again, it’s confirmed that Zero Hedge is the feared ombudsman when government or banker statistics try to get away with identifying trends, that are not trends. And often, as in the case being demonstrated here, the false trends are so damaging that one might call Zero Hedge, a life saver.

Tue, 08/14/2012 - 16:21 | 2704890 ATG
ATG's picture

Logical flaw Dept:

"Since the main focus in the retail sales report is on the percent change in seasonally adjusted monthly retail sales, the relevant comparison is the percent change in the seasonal adjustment factor between June and July."

We all know about BLS and seasonal adjustments for unemployment that show 8.3% hypothetical vs 28.27% de facto unemployment:

In related Street news, NFLX targeting 21:


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