On Thursday, the market digested reports of intensified fighting in Ukraine, with that nation's president saying Russian troops had entered the country and were fighting along alongside Russian-backed separatists.
To Cashin, who boasts more than 40 years' experience on Wall Street, the more than five-month crisis in Ukraine could soon bubble over.
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"The European economy is not that strong, so whether it's sanctions or whether it's withholding fuel, we are at economic risk here, too," he said on "Squawk on the Street."
The last four trading sessions have been the slowest of the year, in terms of volume, as investors rotate out of stocks and take the "flight to safety" into bonds, Cashin said. More money could pour into bonds should geopolitical tensions spike or the global economy hits a snag.
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"It looks like interest rates all around the globe are pressured now, and I think it gets back to Europe and the possibility that actual deflation might break out there," he said. "Look at what's going on. Japan is easing like crazy and deflation is still a threat. ECB has got rates way down [and] deflation is still a threat. So this could last for a very long time. This is not normal."
—By CNBC's Drew Sandholm