When asked to describe his «skepticism» about human - caused global warming, Watts went into a long discussion about his concerns that encroachment of human development
near surface temperature stations has introduced a bias into the temperature record.
A few highlights have already been discussed by Victor Venema related to
the surface temperature station datasets, but there'll be much more on offer if you dig deeper.
See a similar graph of the monthly data from
the surface temperature stations of the Climate Anomaly Monitoring System (CAMS) of the Climate Prediction Center (CPC) at the U.S. National Centers for Environmental Prediction (NCEP).
I found that in the raw data there was a drop in average temperatures in the late 1960s across eight of
the surface temperature stations.