Attention Shoppers: Christmas in Jeopardy

Investors' plea for change is just not materializing. Since the polls closed on Election Day, the markets have been in a free fall, with the Dow down nearly 10 points following a 443-point drop on Thursday, the Wall Street Journal reports. The markets are factoring in a nasty recession that could likely get worse before it starts to recover. The focus today will be on jobs data, which the newspaper says will likely be "bleak." How bad? The Labor Department is expected to report that "employers cut hundreds of thousands more jobs in October," according to the New York Times. The Washington Post's Steven Pearlstein reckons President-elect Barack Obama "will inherit the weakest U.S. economy in 25 years, with output shrinking, unemployment rising, the federal deficit out of control and a financial system on government life-support."

Another frightening economic indicator is worsening retail sales that could turn the Christmas of 2008 into one of the worst in memory. The NYT doesn't sugar-coat it. "Sales at the nation’s largest retailers fell off a cliff in October, casting fresh doubt on the survival of some chains and signaling that this will probably be the weakest Christmas shopping season in decades," it reports. The pain is being felt across the sector, with double-digit October declines called in by upscale Neiman Marcus to nearly as bad sales-drop figures at the Gap. And, just in time for Christmas, toymaker Mattel will cut 1,000 jobs, or 3 percent of its work force, around the world "due to higher production costs and the economic crisis," the Associated Press writes.

Europe's remedy—and this will sound familiar—is slashing interest rates to jump-start the overseas economy. The once-dovish European Central Bank and Bank of England took a big whack at benchmark interest rates on Thursday. The BoE took the healthiest swing, slashing rates by a startling 1.5 percent, or, as the Financial Times put it, "a cut three times larger than any seen since the Bank’s monetary policy committee was established in 1997." The ECB made a more modest cut of 0.5 percent. Thursday's cuts are only the beginning, as some economists are throwing around the phrase "free money" once again. "It's the race to zero,'' an economist at Aviva Investors Ltd. in London told Bloomberg this morning. "There's no obstacle to more rate cuts.''

Underscoring the rate-cut mania is an increasingly pessimistic global economic outlook. The International Monetary Fund on Thursday revised its forecast downward again, saying it now sees the global economy's growth slowing to 3.7 percent this year and 2.2 percent in 2009, the WSJ writes. By this calculation, we are firmly in "global recession" territory at the moment, the newspaper adds. It's perhaps being felt hardest in China, where even the unsinkable Prime Minister Wen Jiabao is saying "this year would be 'the worst in recent years for our economic development,' " the NYT writes.

There are few laughs in the leisure-and-entertainment sector this morning after Disney announced a 13 percent drop in fourth-quarter net income—a harbinger of tough times ahead for all its business ventures. Up until now, Disney "had managed to dodge the fallout from the slowing economy, even as many of its peers struggled," writes the WSJ. But, with consumer spending retracting throughout the U.S. economy, Disney is particularly worried about anticipated fallout in attendance at its theme parks. They make up some 30 percent of the entertainment giant's annual turnover. The chips are really down in Vegas, too, where struggling Sands Corp. warned "it could violate debt covenants" and that its ability to stay in business is in "substantial doubt" if it doesn't raise new capital very soon.

There is potentially bad news for Google this morning. The WSJ has an exclusive story that says Microsoft is trying to "steal" from Google a lucrative mobile search deal with cell-phone powerhouse Verizon Inc. Microsoft, which knows a thing or two about dealing with the Justice Department, appears to have taken advantage of Google's recent distracting regulatory battle over its Yahoo online-ad alliance by offering Verizon a "sweeter deal to put its search service and related advertising on Verizon phones," including "more generous revenue sharing and a guarantee of substantially higher payments to Verizon," the WSJ reports.

And finally, we go back to the Obama beat, where it emerged yesterday that HBO has scored the rights for an all-access documentary on the president-elect in, what Variety reports, is a "low seven figures" deal. Edward Norton's production company, Class 5 Films, has had nearly unfettered access to Obama since 2006, filming his trip to Kenya, parts of the campaign trail, and now through the inauguration. The premiere is set for 2009.