Issue with PublishSubject and TestScheduler, item isn't emitted

I have been facing an issue with subjects and TestSchedulers. My tests work if I use a trampoline scheduler but for some reason they fail if I use the TestScheduler. Also If I do not supply any subscribeOn or observeOn scheduling tests still pass.

Here's my sample test and relevant classes.

@RunWith(MockitoJUnitRunner::class)
class DemoViewModelTest  {


    //Error Mocks
    private val actionsStream: PublishSubject<DemoContract.ViewEvent> = PublishSubject.create()

    private lateinit var viewModel: DemoViewModel

    private val handler = mock(DemoContract.Handler::class.java)

    @Before
    fun setup() {
        viewModel = DemoViewModel(schedulersProvider, handler)
        viewModel.viewEventsStream = actionsStream
    }

    @Test
    fun testUpdateCounter() {
        actionsStream.onNext(DemoContract.ViewEvent.UpdateClick)
        testScheduler.triggerActions()
        verify(handler).onUpdate()

    }


    protected var testScheduler = TestScheduler()

    protected var schedulersProvider: SchedulersProvider = object : SchedulersProvider() {
        override fun mainThread(): Scheduler {
            return testScheduler
        }

        override fun io(): Scheduler {
            return testScheduler
        }

        override fun computation(): Scheduler {
            return testScheduler
        }

        override fun newThread(): Scheduler {
            return testScheduler
        }

        override fun trampoline(): Scheduler {
            return testScheduler
        }

        override fun single(): Scheduler {
            return testScheduler
        }
    }
}

And my ViewModel class

class DemoViewModel (val schedulersProvider: SchedulersProvider, val handler:DemoContract.Handler) : DemoContract.ViewModel() {

    var viewEventsStream: Observable<DemoContract.ViewEvent>? = null
        set(value) {
            field = value
            subscribeToViewEvents()
        }

    private fun subscribeToViewEvents() {
        viewEventsStream?.let {
            it.subscribeOn(schedulersProvider.io())
                .observeOn(schedulersProvider.mainThread())
                .subscribe(object:Observer<DemoContract.ViewEvent>{
                    override fun onComplete() {

                    }

                    override fun onSubscribe(d: Disposable) {
                    }

                    override fun onNext(t: DemoContract.ViewEvent) {
                        onViewEvent(t)
                    }

                    override fun onError(e: Throwable) {
                    }

                })

        }
    }
     fun onViewEvent(event: DemoContract.ViewEvent) {
        when (event) {
            is DemoContract.ViewEvent.UpdateClick -> {
               handler.onUpdate()
            }
        }
    }

}

and My Contract class is

interface DemoContract {
        abstract class ViewModel

        sealed class ViewEvent {
            object UpdateClick : ViewEvent()
        }

        interface Handler{
            fun onUpdate()
        }
    }

A few things about this, If I replace

viewModel.viewEventsStream = actionsStream

with

viewModel.viewEventsStream = Observable.just(DemoContract.ViewEvent.Update)

this test passes.

Can someone throw some light on this, thanks in advance.