NEW YORK (TheStreet) -- The financial markets of the world are all connected and today they are to moving pretty well together.
All the major world markets are down. What's going on?
Well, there is China telling stock market investors to be careful by cutting margin borrowing. In the Eurozone, Greece seems to be on the verge of "Grexit." The yield on the 10-year Greek bond rose to 12.85% today. The 3-year bond yield has approached 30%.
In the United States, the Consumer Price Index came in stronger than expected, raising the possibility that the Federal Reserve might increase short-term interest rates in June, rather than in September or later as almost everyone in recent days had been forecasting.
Oh, the there is Putin selling missiles to Iran, thumbing his nose at President Obama. And, in Iraq, the insurgents seem to taking on another major city. Elsewhere in the Middle East, violence seem to rising up all over the place.
Earlier this week the International Monetary Fund suggested that economic growth among the developed countries was going to be even lower than originally thought. It seems as if the reduction in oil prices has not stimulated spending as much as was originally believed.
Then there are the emerging countries. Not in the best shape, but the IMF stated that rising U.S. short-term interest rates might really do them in.
And, then there the fear that the U.S. stock market might be overvalued. There is, for example, Robert Shiller's Cyclically Adjusted Price Earnings ratio. It has just hit a new high local, trailing only the level it hit in 2000, the highest, and in 1929. As stated many, many times, Shiller's CAPE measure does not say anything about the timing of a change in stock market prices. All it does is indicate that stock prices in the United States are quite high.
Three rounds of quantitative easing on the part of the Federal Reserve System has encouraged investment in the equities markets. One of the mantra's over the past five years or so has been "go with the flow of the Fed" or "don't fight the Fed."
This ideal is exemplified in a recently published and already very popular book, Invest with the Fed: Maximizing Portfolio Performance by Following Federal Reserve Policy.
This approach to investing has helped to bring the U.S. stock market up to all time highs, without adding much to the economic growth of the country.
But, the European Central Bank started a round of quantitative easing in March and this has helped stock markets in Europe hit all time highs this month. And, then there is the quantitative easing going on in Japan, with the stock market in that country hitting all time highs in April.
The concern is whether or not the current events going on around the world are sufficient to break investors' expectations about the ability of central banks to keep the world economy afloat.
It may not be the peak. But under present circumstances, one needs to keep their eyes and ears open to see what happens. History shows us that when things start to move in the financial markets they move very rapidly.
World financial markets are intertwined and capital is free to flow just about anywhere it wants. And, it does, so watch out!
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.