Yeah, that was exactly my case too - I've run it once, just for test, then deleted everything to start from scratch - and hit that git problem :-)
I've lost some time working out the reason and finding the workaround, so the compilation is still running, so not today, but definitely tomorrow it should be ready.
If you want to give it a try yourself - the workaround is simple. Just remove the "--depth" argument from the git command it uses (see diff below). The only drawback is that "poky" dir will take about 140MB instead of ~60MB after setup.sh run.
user@linux:/yocto/meta-clanton_v1.0.0s> diff -u setup/gitsetup.py.orig setup/gitsetup.py
--- setup/gitsetup.py.orig 2014-03-15 17:42:24.177230838 +0100
+++ setup/gitsetup.py 2014-03-15 17:43:11.465254132 +0100
@@ -114,7 +114,7 @@
run_command('git init')
run_command('git remote add origin %s' % url)
fetchspec = "%s:%s" % (gitref, gitref)
- run_command('git fetch origin --depth=%s %s' % (opts.depth, fetchspec))
+ run_command('git fetch origin %s' % (fetchspec))
else:
# We cannot use --depth here. Part of the explanation:
# http://thread.gmane.org/gmane.comp.version-control.git/73368/focus=73994