With oil still trading near $45 and continued uncertainty in global markets, below is a key piece which highlights why Jeff Gundlach's troubling 2015 predictions are now worrying market participants.

By Art Cashin Director of Floor Operations at UBS 

January 26 (King World News) – There was a bit of quaking in equities Friday and more than a little rumbling.  In the end, they put a hole in the blue chips and energy group.

Earnings Disappointments And Crude Dip End Bulls Four Day Win Streak – U.S. stocks failed to follow their European cousins, who continued their ECB induced rally.

Dragging on U.S. stocks were some less than sterling earnings reports.  UPS reported that guaranteeing holiday deliveries was far more expensive than they had assumed.  They were also a bit downbeat on the outlook for 2015.  So, too was Kimberly Clark.

Stocks opened lower, led by the Dow Jones.  They traded choppily sideways in mild negative territory, coming under more pressure around 10:30, when WTI began to move lower.

In late morning, I sent a note citing some buzz on trading desks about projections allegedly made by Jeff Gundlach, the bond king of Double Line Capital:

Jeff Gundlach's projections for 2015 are making the rounds of trading desks.  In them, he shows concern about negative pull on the economy if oil prices remain quite low.  He claims that all the job creation since 2007 has been fracking related.  As proof, he says that if you extract the data from Texas and North Dakota, you will see no growth in what remains.

If so, oil at this level may present a real problem for the Fed and the economy.

Markets churning in front of Sunday's Greek election and resolution of affairs in Saudi Arabia.

Among the more research related chat group, the note raised a minor firestorm among some of the group about the fracking related totals overall and to the choice of 2007 as a starting point as arbitrary.  That exchange continued for a bit.  After the citation of some existing studies, Mr. Gundlach’s contention seemed to be accepted as, at least, plausible.

From a more trading related chat group came this anecdotally corroborative note:

Our landlord in Wyoming also owns interests in several hotels which cater to the oil business.  The parking lots at night are full of trucks with names on the doors that read like the components of the XOP (and the bars are full of rough-hewn guys who rival the FoF in terms of thirst — though probably with very few high-brow martinis).  Business is definitely off.

Interestingly, the intermountain West dodged many of the bullets in the housing bust, as state revenues come more from extractive industry royalties than from property taxes.  This is likely to be quite a bit tougher in this neck of the woods.

The Gundlach projections remained a discussion item but not much of a market influence in Friday’s trading.

Around 2:00, bids around the floor began to thin out.  Part of it seemed to be further weakness in WTI.  Another factor was the indication for some market on close selling.  Others felt there was a cutting of risk in front of Sunday’s Greek election.

Whatever it was, the Dow went into a deep funk from 2:00 right into the closing bell, giving up more than half of Thursday’s big gains.  Nonetheless, they broke a three week losing streak.

Overnight And Overseas – Initial reaction to the Greek election was nervous negativity.  The Euro dipped to a new low before rebounding smartly.  The Russian ruble is falling under threat of new sanctions.  European equity markets regrouped and the German Dax is trading solidly higher.

Oil and commodity prices continue under pressure as the new Saudi King said he will continue current policies.

Consensus – Traders will watch to see if equities continue to follow and react to the price of oil.  Geo-politics may reassert as we await hints in the FOMC statement.  Stick with the drill – stay wary, alert and very, very nimble.

***ALSO JUST RELEASED: Destructive Forces Now Being Unleashed Across The Globe CLICK HERE.

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Eric King