Mish's Global Economic Trend Analysis

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• Google Insiders Bail Prior to Stock Plunge
• Spanish Military Association Wants "Declaration of War" Against Separatist Catalunya; Expect More Extremism
• Problem is Demand: First IBM, then Intel, now Google

Google Insiders Bail Prior to Stock Plunge Posted: 19 Oct 2012 12:16 PM PDT There is nothing like inside information, provided you are on the inside. But heaven forbid should you be on the outside and act on a tip as did Martha Stewart. Insider Monkey reports Google Inc. (GOOG): Insiders Sold $280M Prior to Crash Google Inc. (NASDAQ:GOOG) chairman Eric Schmidt was very active in late September, as he executed 226 transactions in just three days from Sept. 24 to 26, selling off more than 211,000 shares at per-share prices between $742 and $764 per share. He came away with about $158 million. Other noteworthy insiders are Google Inc. (NASDAQ:GOOG) CEO Larry Page and co-founder Sergey Brin, who had conducted several insider sales in the first half of this month, totaling about $120 million in value and the pair spared themselves about $12 million in combined losses. Brin conducted a series of transactions Tuesday, October 2, selling 83,334 shares at between $750-$765 a share, with a combined value of at least $62.5 million. Page had been selling shares regularly over several days. Starting October 8, he sold 20,833 shares at $754-$762 a share for a value of $15.7 million; 20833 shares at $744-$760 October 9, for a value of $15.5 million; 20,833 shares at prices between $741 and $746 per share October 10, for a value of $15.4 million; and 20,835 shares at prices between $752 and $758 October 11, a value of $15.7 million. Also in October, Google Inc. (NASDAQ:GOOG) board member John Doerr sold his 6,000-share holding at between $759 and $762 per share, for a total value of about $4.5 million, and senior vice president David Drummond pared off 568 shares at $759 each for a value of about $430,000. Notable Sergey Brin Transactions It's one thing to sell a few shares routinely, it's another thing to dump a load right before the plunge. Here is an edited screen shot of some Google transactions of co-founder Sergey Brin. Congratulations to Board Member Doerr Congratulations to board member John Doerr who according to Yahoo!Finance Inside Sales acquired 12,285 shares on September 3 for the bargain basement price of $0, and sold every one of them on the same day, netting a cool $8,251,000. On September 30, Doerr received 10,966 shares, also for the bargain basement price of $0, and sold every one of them on the same day as well, netting another $8,343,000. $16+ million in free shares dumped in a month, right near the top, is not a bad month, but Sergey Brin did far better. On October 1, Sergey had a spectacular day, receiving 83,334 shares for the bargain basement price of $0, dumping every one of them for $750.82 to $765.18 per share, for a whopping net total of $63,167,000. Happenstance? Inside Information? Or do insiders simply get free shares and dump them as soon as they can? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Spanish Military Association Wants "Declaration of War" Against Separatist Catalunya; Expect More Extremism Posted: 19 Oct 2012 09:30 AM PDT The AME, a Spanish military organization says in an interview on Dutch TV "in the event of tampering or separatism" the military should act. Via Google Translate, please consider military association calls for declaring a "state of war" against Catalunya. Barcelona (Editorial). - The Association of Spanish soldiers returned to the charge. The AME explained in an interview with Dutch television Nieuwsur that, in his opinion, "in the event of tampering or separatism" should be declared "a state of war, state of emergency or a state of siege" in Catalunya. This has manifested forcefully president of the association, one of three in Spain that brings together active and retired military, Colonel Leopoldo Munoz Sanchez quartermaster. The AME, specifically, make 3500 partners. "Spain is a nation totally inseparable and if split or threat of separatism us, in accordance with Article 8 of the Spanish Constitution, we must ensure the territorial integrity, so our view is to declare a state of war, state of emergency or martial law ", said Muñoz Sánchez in a Dutch documentary about the Catalan question. Not the first time that the AME is expressed in this regard. On September 24 threatened to bring before military tribunals President of the Generalitat , Artur Mas, and all Catalans institutional positions that promote the independence of Catalonia, if the military is forced to intervene to "guarantee the sovereignty, independence and territorial integrity "of Spain. Nor was the only military threat to Catalonia in recent times. In late August, the Army Infantry excoronel Spanish, Alaman Francisco Castro, said in an interview with confidential Digital Alert willingness to respond with their own lives to defend the state of eventual independence of Catalonia. So the military has been expressed, it considers that the separation of any autonomy only be "over my dead body." Expect More Extremism As Spain sinks further into the abyss, expect more cries from separatists, not less. As happened in Greece (but so far to a much less extreme in Spain), citizens have shifted well away from the center to far left or far right groups. Everyone, everywhere is Fed up with austerity (which to this point has primarily focused on tax hikes).  Tax hikes have been an enormous mistake.What's really needed is work rule reform and less government. Unfortunately, badly-needed reforms have been put off for so long that increased violence is highly likely in Greece, in Spain, in Portugal, and in Italy, should such reforms finally be implemented. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Problem is Demand: First IBM, then Intel, now Google Posted: 18 Oct 2012 11:56 PM PDT Three technology bellwethers missed income or revenue expectations in the past few days. Let's take a quick look at IBM (IBM), Intel (INTC), and Google (GOOG). IBM TechCrunch reports IBM Q3 Earnings Mostly In Line With Expectations IBM just released its Q3 2012 financials. Big Blue's GAAP earnings came in at $3.8 billion, up 3% from the last quarter. Non-GAAP earnings were $4.2 billion. Overall, the company reported revenue of $24.7 billion, down from $25.8 billion in Q2. Ahead of the earnings release, most analyst expected that Big Blue would report robust earnings. The consensus was that earnings per share would increase to around $3.62 (up from last quarter's $3.51 non-GAAP EPS), but that overall revenue would decline to about $25.4 billion from $25.8 billion last quarter. With $24.7 billion, the company missed the analysts' expectations. Google On Thursday, Google accidentally posted incomplete earnings four hours early and its shares were halted following a huge plunge. Yahoo!Finance has the details in Google Shares Slammed! Company Misses Estimates in Premature Earnings Release. Shares of Google (GOOG) are getting taken behind the woodshed this afternoon after the company's third quarter earnings results were released about four hours earlier than expected. In what is being called an "unfinished earnings release" Google reported earnings of $9.03 per share on revenues of $11.3 billion. The Street had been expecting EPS of $10.65 on revenues of $11.8 billion. Shares fell immediately on the news, dropping nearly $70 within moments before to being halted at $687.39, down $68.10 or 9%. Google is blaming RR Donnelley (RRD), the owners of corporate reporting system EDGAR, for filing their 8K without authorization. Shares of RRD fell as much as 7% before recovering slightly. Information thus far is limited. What can be seen immediately is that Google laid off a significant number of employees in its Motorola Mobility division, lost traction on the critical Cost per Click metric, and apparently failed to find a way to monetize mobile users. Net margins also fell sharply to 27% of revenues compared to 37% last year. Intel In September Intel warned third quarter revenue would be a billion dollars less than expected. That prior warning accounts for the New York Times headline on October 16: In a Slow Market, Intel Exceeds Lowered Expectations. Intel crossed an earnings bar it lowered for itself last month, but the problems plaguing its main market for semiconductors — personal computers — seemed no closer to ending. Intel, the world's biggest maker of chips, is feeling pain from a global downturn in demand for personal computers. "The problem is demand," said Ken Dulaney, vice president at Gartner, a technology research firm. "People are buying other things with their disposable income for electronics, like tablets, televisions, smartphones, e-readers and gaming devices. Intel is trying to take its technology to these consumers, but this is a transition period." Problem is Demand Yes indeed, the problem is demand, and also customers, jobs, part-time jobs, declining real wages, a fiscal cliff, Europe, China, a global recession, and shares priced well beyond perfection. The only counterbalancing force is the Fed. Moreover, and in spite of what everyone seems to think, the Fed is not really in control of much of anything. How much longer shares can defy gravity remains to be seen. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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