Anthony Watts is completely inept at data analysis; he's done things like plot different anomaly graphs (from different baselines) on the same axis, correlate time with time, and lovingly publish analyses that turn graphs upside down and claim the trend reversed. On one of his deceptions, which was supposedly "peer reviewed", I spotted the critical error within twenty seconds, and [other friend] got it within fifteen. (One of my friends at the U of T, in the social sciences, figured it out quickly too once I gave him the relevant terminology.)
As for this particular one, he's confusing weather and climate (note the lack of trendlines and how he uses only one year instead of the thirty that the WMO and IPCC use; incidentally the first dataset he uses goes back to 1850 but he only plots the last 20 years.), assuming the anthropogenic global warming theory says that CO2 is the only influence (which is dead wrong; what's missing from that graph is that late 2007 and early 2008 were a particularly strong La Nina, which shuffled heat away from the measurable surface. 1998 was a very strong El Nino, the exact opposite, and is a favorite of Watts to start his trendlines in), and lying through his teeth (what would his analysis method have said if he had done this in 1998? It could have been as high as +0.446!).
This denier meme, also sometimes known as "January 2008 wiped out a century's worth of warming!" (DailyTech and similar denialist sites) or the Very Little Ice Age (those who can understand the difference between weather and climate). The silly part is, just as predicted, the temperature rose after January (such that if January "wiped out a century's worth of warming", March could have been said to have "warmed as much as the past century!".). http://climateprogress.org/wp-content/uploads/2008/04/nasa-ice-age.jpg shows what I mean. (Note that this isn't too significant on its own either; it just showed the La Nina fading and removing its masking effect from the temperature trends.)
It's ironic that you'd send this to me today, by the way: Look what the UK Met Office (where Watts plotted his first dataset from) just released. http://www.metoffice.gov.uk/corporate/pressoffice/2008/pr20081216.html
For more amusing stuff on Watts, here's the links to support all of my claims from the
first paragraph:
http://tamino.wordpress.com/2008/03/02/whats-up-with-that/
http://tamino.wordpress.com/2008/03/27/how-not-to-analyze-data-part-1/
http://tamino.wordpress.com/2008/03/30/how-not-to-analyze-data-part-deux/
http://tamino.wordpress.com/2008/04/01/how-not-to-analyze-data-part-3/
http://tamino.wordpress.com/2008/04/07/how-not-to-analyze-data-part-4-lies-damned-lies-and-anthony-watts/