Retail sales data were the big story of the day, Aaron Task, co-executive editor of, told "RealMoney" radio show listeners Thursday. Task is filling in for Jim Cramer this week.

Based on preliminary numbers from 57 retailers, 53% missed expectations for their February numbers, Task cited Thompson Financial as saying.

The sales tally was up 2.9%, in line with forecasts, but Task reminded listeners that Wal-Mart ( WMT) accounts for half of the retail index.

The megastore had a solid February, as did a handful of other big-box stores. But Task said that the big story as far as Wall Street is concerned was the disappointing results from specialty and teen retailers, including Abercrombie & Fitch ( ANF), Aeropostale ( ARO) and Gap ( GPS).

He said that the Treasury market was the other big story, as the benchmark 10-year note slumped and pushed the yield to 4.65%, its highest level since June 2004.

He said that the selloff continued Thursday on weekly jobless claims data, which showed that claims came in below 300,000 for the seventh week in a row. Task said that 300,000 is the level that economists think of as key when measuring expansion and contraction in the labor market.

If the economy is close to full employment, or the lowest unemployment level we can have before wage inflation kicks in, that could lead to more Federal Reserve money tightening down the road, he said.

Treasury prices and yields move in opposite directions, so if prices continue to fall and yields move higher, that will affect anyone buying a home, applying for a loan or refinancing, Task said.

That is because mortgage and loan rates track the rise and fall of the 10-year Treasury note.

There is also a direct correlation between Treasury movements, Fed rate hikes and the stock market, he said.

Citing data from Miller Tabak, Task said that from 1965 to 1981, the Dow was essentially flat, and interest rates went from around 4.65% to 14%.

But during the bull market that lasted from 1982 to 1999, rates fell back down to 4.6% and the Dow topped out above 11,700 from 875.

Task said that central bank decisions in the European Union and in Japan also weighed on the Treasury market, with the European Central Bank raising rates to 2.5% and the Bank of Japan gearing up to raise rates from 0%.

Why would higher rates around the world affect the U.S. market? Task said it's all about relative attractiveness to foreign investors.

The fed funds rate is at 4.5%, and will likely hit 4.75% or 5%, he said, adding that this is still the highest in the world and thus the best return for foreign investors.

But if the U.S. is near the end of its tightening cycle and the European Central Bank and Bank of Japan are beginning theirs, the difference between those levels and relative attractiveness will diminish.

This could draw foreign money away from the Treasury market. Foreign investors hold more than half of the U.S. government bond market, and economists believe that their robust buying of Treasury debt has helped keep rates on the 10-year note low.

Cody Willard, president of CL Willard Capital and a tech and telecom contributor to, joined Task to talk about one of his largest holdings, Google ( GOOG).

Google Goods

After George Reyes , Google's CFO, said that growth rates would slow, the stock got hammered, Task said.

Willard's take on the action was that Reyes said nothing new, but simply reiterated the well-known fact that the law of large numbers would catch up to the company and that it will have to figure out new ways to grow.

Task pointed out that sometimes the fundamentals don't matter as much as the action in a stock, and now that Google has had its second big fall in the year, Task wanted to know where Willard sees it heading.

Given all the gyrations, the sentiment and the technicals are too jumbled to know what the stock will do in the near term, Willard said.

But Willard likes the long-term story, saying that Google is one of his top-five positions and that he plans "to own Google forever."

Mike Ullman, CEO of J.C. Penney ( JCP), joined Task to talk about his company's turnaround story.

Same-store sales were up 2.3% in February, more than double expectations, and Ullman said that the company has seen consistent growth over the last several years in accessories, shoes and home goods.

Apparel has been up and down based on weather trends, he said.

"We've transitioned from being a turnaround to a growth story," Ullman said, citing the fact that the store has finally brought in better styles and that it has something to offer that is "legitimately compelling."

But there's still room to grow, because 50% of all middle-income women shop at J.C. Penney, he said.

Task said he has heard that mall anchor stores such as J.C. Penney are doing better than specialty stores.

Ullman said he couldn't comment on whether that was true, but he did say that his company's three divisions -- catalog, online and stores -- are working together seamlessly.

He also said that his store is focused on the U.S. consumer, that its "core customer is middle America" and that it doesn't have plans for overseas expansion.

Task asked if Ullman was worried about rumors that the American consumer is headed for tough times.

Ullman said that he believes that middle America is in good shape and that the economy is generally pretty strong.

That is one reason why the company held the J.C. Penney experience in New York City, setting up a 15,000-sqaure-foot virtual store in the heart of Times Square, to expose the general public and the press to the store's own designer and exclusive brands.
Aaron L. Task is the co-executive editor of In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Click here to send him an email.

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