Emerging market stocks were hit hard today, along with their bonds. Lingering fears over higher U.S. interest rates triggered profit-taking again, one day after we saw some good rallies.

The markets aren't expecting as big a cut in interest rates tonight. For foreign investors the yellow light has gone up and caution is on the rise.

There's a little bit more caution coming into the investment outlook mostly because of fears of higher interest rates in the U.S. and Europe and now Japan.

The higher that rates go from here, the more the bond market needs to respond to them. The bond market should finally respond to upward pressure on long-term rates.

With lingering concerns over Iran, Nigeria ... the market is correcting upwards because it is focusing on fears in the geo- political realm.

It's one of the fundamental principles of the stock market: When interest rates go up, stocks go down. And along with financial companies and cyclicals, technology companies - with their sky-high price-to-earnings multiples - should be among the biggest losers in an environment of rising rates.