Ostensibly, US markets are not far from their all-time highs. And yet, the most watched market indices reflect extraordinary unease about the US economy.

For now, major observers acknowledge that US equities have failed to reach new heights and US economy does not reflect consumer and business confidence. Nevertheless, they continue to believe that global yield curves, which are perceived as the most powerful predictors of business-cycle fluctuations, do not yet suggest the coming of a global recession.

Market veterans quote the old adage, “sell in May and go away,” but the current disquiet is not just seasonal. It reflects deeper concerns as well.

The great disquiet

The story of major market indexes is not inspiring. A year ago, the Dow Jones Industrial Index (DJIA) soared to almost 18,300; after the plunge of the first quarter, it is hovering around 17,700. Similarly, the Standard & Poor’s 500 exceeded 2,100 a year ago; after the February lows, it is struggling to stay above 2,050. According to prudent valuation measures, these figures remain grossly overvalued.

Similar concerns are evident in initial public offerings (IPOs) and mergers & acquisitions (M&As), which typically precipitate market trends. Recently, two major Wall Street firms – Bank of America and Citigroup – warned that, as markets are tightening, equity IPOs are their lowest since 2009, while M&A deals suffer from a significant slowdown.

Indeed, major Wall Street firms, which usually epitomize optimism, have recently become bearish, including Bank of America (BAC), Citi (C), JP Morgan Chase (JPM), UBS, and even the bullish-to-the-end Goldman Sachs. However, the unease is expressed in cautious terms because key players do not want to contribute to circumstances in which a perceived shift in investor risk perception itself would trigger a fall.

New concerns are fueled by the great equity exodus. Between early April and mid-May, capital outflows soared to almost $45 billion, which some analysts have termed the “largest redemption period since August 2011.” That’s when Washington’s debt crisis sparked a credit rating downgrade, which pushed US equity market in the bear market territory. In the past decade, only the plunge of fall 2008 has been worse.