In this segment from the MarketFoolery podcast, host Chris Hill and senior analyst Matt Argersinger turn their gaze across the oceans to the markets in other lands, both developed and emerging, because an interesting split is occurring.

Wall Street is up, with the S&P 500 near an all-time high, while the measures of the whole globe's equities markets -- including the U.S. -- are actually off 8% so far in 2018. Is it the trade wars? Maybe not, suggests Argersinger -- it could be the Fed.

A full transcript follows the video.

This video was recorded on Aug. 15, 2018.

Chris Hill: We haven't really talked about international investing on this show in a while. I wanted to touch on this. We were going back and forth on Slack this morning. Certainly, Turkey has been in the headlines, Russia, China, as well. We're seeing this divergence. We're seeing the S&P 500 close to an all-time high. We're seeing the MSCI All World Index -- which includes the U.S. -- down about 8% year to date. I'm wondering, as an investor, when you look at both emerging markets and developed markets outside the United States, what goes through your mind?

Matt Argersinger: Credit to Riva Gold, this was an article in The Wall Street Journal today that caught my attention, talking about how it's interesting that the U.S. markets -- I know we're down a little bit today, but we're within a few percentage points of all-time highs. But, if you look outside the U.S., it has been a rough market, to the point where there are legitimate bear markets in a lot of regions around the world. We talked about Turkey, but look at China, for example. The Shanghai Composite Index in China is down about 25% this year. The MSCI China Index, which actually includes a lot of foreign-listed China listed companies, many that we know here in the U.S. on the U.S. exchanges, it's had a similar fall from its high, about 25%.

A lot of people are focusing on some of the headlines right now, the trade tariffs, the fact that there's a trade war, there's countries retaliating against the U.S., U.S. imposing tariffs on steel and aluminum, things like that. The real part of the story here, though, that I think might be missing from the headlines is that what's happened here in the U.S. is Treasury rates have risen. Obviously, the Fed has been raising rates. You can now get a roughly 3% yield on the 10-year treasury, which is the benchmark.

You have the U.S., which now has relatively compelling, risk-free yields. What that does, especially to emerging markets, is it causes capital to flow out of those countries and comes to the U.S. It's safer, you get a high yield. Why am I going to get a possibly lower yield in a place like Portugal, when I can get a 3% yield in the U.S. and it's a lot safer? That's the dynamic that's playing out.

A lot of these countries, unfortunately, have been reticent to raise their Central Bank rates. Turkey is the latest example. That causes yet more capital flight, it causes inflation, while they're trying to hold down the rates, the currency depreciates, it exacerbates the situation. That's causing a lot of capital to flow back to the U.S. I think that explains some of the relative outperformance we're seeing.

Hill: And, by the way, not to say there aren't great individual companies and businesses in some of these countries. But for a lot of people who, when they initially think about investing internationally, particularly if they're working with a financial advisor, a lot of times, one of the first solutions that's offered to them is some sort of an ETF or index. It's like, "This way, you get broad exposure to the entire Chinese market." You know what? Broad exposure isn't always great.

Argersinger: No. If we just stick with the China theme for a second -- here are some companies that we know and talk about a lot here at The Fool: Baidu, down 22% year to date; Alibaba, down 20%;, down 25%; Tencent, down 20%. These are big losses in companies that are not fly by-night companies. These are some of the biggest online platforms, massive customer bases, that we have in the world. And they've gotten crushed.

Hill: Sticking with those examples, do you look at them as examples of being oversold? Do you look at some of them and think, "Boy, if that stock is on a 25% sale, I might have to pick up a couple of extra shares!"

Argersinger: I think the valuations are getting to a point where they look very compelling. Especially, a lot of this is because of the prevailing U.S.-China tensions that are going on right now. But it's not like these companies are trading back and forth between the U.S. These are mostly domestic-focused Chinese companies that dominate their industries.