Merrill Lynch recently said that Intel (NASDAQ: INTC) could be hurt by slower spending for PCs and servers. The company's CEO, Paul Otellini, begs to differ. According to Bloomberg, "Seventy-five percent of our sales are not in the U.S. and global business seems very strong still," Otellini said in an interview at Allen & Co.'s media conference in Sun Valley, Idaho. "There may be some patterns in the U.S. that may be concerning to some people, but we haven't seen them at this point."

Short sellers are siding with Merrill and against the company's view of its rosy future. Shares sold short in Intel for the period ending June 30 rose 44%, or 27.4 million, to 89.2 million. That was the largest increase for any company traded on Nasdaq.

Why would investors trade against the company's own statements? Probably because they don't believe Otellini. With Intel trading at $20.64, it is not all that far above its 52-week low of $18.05. In December of last year, the stock was nearly $28.

Intel probably cannot cut through the headwinds facing the industry. Sales of PCs are not likely to do well in the second half as consumer and corporate spending are curtailed due to a falling economy. Hoping that overseas sales will make up for that is not necessarily a sure thing. China recently announced a sharp drop in the rate at which its exports are growing. That means that its GDP increases could fall sharply, sending the world's most populated country into a recession. Other Asian economies could face the same fate.

Intel is talking out of its hat. The market has figured that out.

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