The headlines have been dominated by the worldwide spread of the coronavirus from China and certainly markets remain uneasy about it, even though the Standard & Poor’s 500 index (SPX) surprisingly continues to hit highs. Why is that? For one thing, the U.S. equity market is viewed as a safe haven, at least as far as global equities are concerned.

For example, some anxiety can be seen in one of the two markets I tend to rely on: the so-called “fear index” VIX and the high-yield corporate bond market. I view these markets as important to confirming overall asset market trends. The VIX has largely returned to normalized levels – sub-15. This is less the case for high-yield, but I am basically attributing this to the fact that bond market is beginning to price in future rate cuts later this year.

With the seismic economic ripples expected and already seen from the outbreak, it would be natural to think that stock market leadership should have changed since the beginning of the year. If you thought that, you’d be wrong.

The video in this report is only accessible to members
The shares that powered the strong pre-corona initial gains (12/31/19 to 1/17/20) are largely the same ones behind the recent SPX surge to new highs. Despite the risk, this market is still driven by tech...

Unlock this article with a FREE 30-Day Trial!

An FSI Pro, or FSI Macro subscription is required in order to access this content.

*Free trial available only on a monthly plan

More from the author

Disclosures (show)

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 2/2

🎁 Unlock 1 extra article by joining our Community!

You’ve reached your limit of 2 free monthly articles. Please enter your email to unlock 1 more articles.

Already have an account? Sign In

Want to receive Regular Market Updates to your Inbox?

I am your default error :)