It has been said that the market has corona fatigue, but the virus does not. Yet, as virus concerns continue to escalate and delay the re-opening and recovery processes, the market is starting to show signs of fatigue. 

As evidence, the chart below shows the breadth of the U.S. equity market has leveled off during the last 3-4 weeks.

US Market Breadth

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US Market Breadth

Further, the market capitalization weighted S&P 500 has outperformed the equally weighted S&P 500 by nearly 10%, so far this year. This is clearly a market rally that has been led by the mega-cap names…more specifically, it has been the mega-cap Tech names that are leading the charge. The mega-Tech firms are improving overall market sentiment, and rising water lifts all ships.

Our second chart focuses on the performance of multiple emerging market asset classes.  This chart is of current interest as it clearly shows the recent surge in EM equities, is not due to the currency markets. The rising equity market would seem to suggest a recovery in growth in imminent. Yet, increased global growth would likely support EM currencies, in a much more pronounced manner.

YTD Performance of Various EM Asset Classes

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YTD Performance of Various EM Asset Classes