Expectations for holiday spending were so low that it would be nearly impossible for things to get much worse. But, they did.

According to a division of MasterCard (NYSE:MA), sales compared to last year may have been down as much as 4%. That would make it the worst holiday season "in modern times," according to Reuters. Sales at specialty retailers such as Gap (NYSE:GPS) fell nearly 20%. Sales at specialty electronics and appliance chains like Best Buy (NYSE:BBY) fell even more.

While the trend may put many weak retailers out of business and allow stronger ones to face less competition, it also means that even the companies that did relatively well will have more layoffs than expected. In most years, the holidays are followed by a period when shoppers look for bargains in January.

Employment in the retail industry could drive off a cliff as the economy moves into 2009. Part-time workers will almost certainly be let go in record numbers. Full-time job holders face extraordinary employment risks.

The retail industry has asked the government for "tax holidays," periods when shoppers could buy goods encouraged by the fact that prices would come down during times when items are not taxed. But, that could encourage consumers to run up more debt.

Providing federal aid to the retailers in the form of revolving credit lines would be a better idea. They need something to ride out the storm, and that should not come at the expense of getting consumers to further undermining.their credit.

Douglas A. McIntyre is an editor at 247wallst.com.

Hewlett-Packard (NYSE: HPQ) is recently trading at $32.25 in pre-open trading, above its close of $29.34 Monday. HPQ reported Q4 net revenue up 19%, or $5.3 billion, from a year ago. HPQ December option implied volatility of 74 is above its 26-week average of 41 according to Track Data, suggesting larger price movement.

ICICI Bank (NYSE: IBN), India's second largest bank IBN, closed at $15.02 Monday. IBI halved its target for growth in lending to 15% - Bloomberg. The Bombay EX 100 IDX is recently down 3.65%. IBN December option implied volatility of 132 is above its 26-week average of 80 according to Track Data, suggesting larger price fluctuations.

Gap (NYSE: GPS) closed at $10.72 Monday. GPS is scheduled to report Q3 EPS on November 20. Friedman Billings anticipates GPS will set expectations for continued weak margins and heavy promotions. GPS November 10 straddle is priced at $1.50, December 10 is at $2.75. GPS December option implied volatility of 105 is above its 26-week average of 57 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

When the entire mutual fund industry is up in arms about a new form of ETF, should investors take note? You bet they should.

There's an interesting article over on SeekingAlpha by HardAssetsInvestor. The article focuses on the Exchange Traded Note product, something I've written about previously. The ETN is similar to an ETF in that it's a fund that trades like a stock. Unlike ETFs though, the ETN is not backed by the underlying assets. Rather, it's a zero-coupon note (essentially, a bond) that's backed by its underwriters. So, it throws an added layer of default risk into the whole investment game.

Where things get even more interesting is the tax treatment of the ETN product. Says HardAssetInvestor's Brad Zigler, "No tax consequence befalls the noteholder until the security is liquidated or matures. Taxes during the holding period? Zip. Nada. Bupkis. That beats the heck out of the tax treatment of mutual funds, too, which distribute income and capital gains." Unlike ETFs investing in commodities which are treated with a complicated tax structure on the futures the funds invest in, ETNs don't pass these taxes through to investors.