TUCSON, Ariz. Tensions between Russia and Ukraine are arguably the first Black Swan event of the year and could have serious implications for the commodities markets, a senior analyst at INTL FCStone Inc. said.
Two-way trade between Europe and Russia is worth about $500 billion, Edward Meir said at the American Copper Councils Copper College meeting in Tucson, adding that most of it is in the form of energy exports to Europe.
Russia is also a key exporter of nickel, palladium and grains.
Russias foreign debt is $732 billion, equivalent to 34 percent of gross domestic product (GDP), Meir said, adding that only Singapore and China have higher debt ratios.
The flight of capital from Russia is also intensifying. Meir said that $62 billion left Russia in 2013, but the figure is already $70 billion thus far this year. The countrys stock market is down 20 percent so far in 2014, and the ruble is down about 11 percent. Russias GDP is also expected to decline by 3 percent from last year, he added.
The "wild card" series of events have made an "economic cold war" very possible, Meir said, noting that sanctions against Russia could be stepped up.
"The sanctions threat is casting a chill over the European economic situation," he said. "This may result in a domino-effect impact on the United States, and maybe even China."