Earlier today, Dr. Fauci sparked anger among those who believe that the covid pandemic is, for all intents and purposes, contained when he said that the upcoming Labor Day weekend will be key in determining whether the nation gets a “running start” at containing the coronavirus this fall, with the implication that Americans should spend the holiday dutifully locked up, or at best within shouting distance of each other when they say goodbye to the summer.
Yet while Fauci’s (“don’t wear a mask… ok fine, wear a mask”) opinion is easy to dismiss, that of Jim Reid, who repeatedly has warned that the consequences from the economic shutdowns will be far more dire and pervasive across all social groups than the impact of covid itself (which targets the most elderly and frail segment of society), is far more relevant, who today warned that the coming flu season could unleash a new wave of chaos on the global economy (not just US) as the population freaks out mistaking ordinary flu symptoms for those of the coronavirus, potentially resulting in overflow of local hospitals.
According to Reid, “as we move into the colder months in the northern hemisphere (where 90% of the global population reside), attention will shift towards a second covid wave.”
As his first graph shows (using the 20 countries with the most cases), the second wave (or extended first wave) is already here for many: “we’ve sorted the legend on the chart by current 7-day moving average (highest to lowest). While the increase in testing will have helped encourage some of this growth, there is little doubt that countries like Spain (114 per 100,000 – 7-day MA) and France (52) have seen their numbers deteriorate in the last month while others like the US (90) have seen notable improvements.”
Yet while flu season will be accompanied by a second wave in cases across many countries, in terms of fatalities or hospitalizations however, “there are no obvious signs of a second wave yet.”
For example, in England there are now 305 covid patients in hospital with 33 patients on ventilation. At the peak, we had 17,000 and 2,800 respectively.
Why is the mortality rate tumbling? Because as Reid explained several months ago, much of this global trend is due to younger and less vulnerable people catching the virus, better medical treatment, and less pressure on healthcare systems, with some even suggesting less deadly mutations although this is speculation at this stage.
The not so good news is that while the lower fatality rate is good news, it further confuses the already confused response strategy.
As Reid explains, “we move to the winter months, it is surely inevitable that case numbers remain elevated and likely increase in many areas. So should policy makers fight the battle of the first wave or learn to adapt?” Indeed, while Reid’s unspoken view is that the latter is the proper approach which is also supported by the numbers, “political/public pressure may encourage the former” especially in Democratic states.
As such, vaccine developments will be key.
Which brings us to the final point from Reid, who in a note published today by Deutsche Bank writes that vaccines normally require 10 years to be operational but covid-19 has ensured the most monumental global effort in history to cut the time frame to within a year. The graph below shows the percentages of clinical trials that advanced from the various phases between 2005-2015. Around 60% eventually advanced from “Phase 3” to “Approved.”
And since there are currently 7 vaccines at Phase 3, the probability of more than one being approved soon are high based on this. The good news is that, on average, once a vaccine for an infectious disease makes it to phase-three trials, it has an 85% chance of being approved. As there are currently seven in phase-three trials, this implies six could be approved (obviously, questions will be asked by the public as to whether corners have been cut and that may impact the initial take up).
Yet, while a vaccine appears statistically likely, it is important to note that vaccines are not 100 per cent effective. In fact, most routine childhood vaccines are only effective for 85-95 per cent of recipients, according to the WHO. In addition, the US Centre for Disease Control says the ‘flu vaccine is regularly under 50 per cent effective.
The punchline: given the imminent feedback time frames, a vaccine could also become a highly politicized US election event ahead of November one which potentially could sawy the outcome of the vote; the real question is even if there is a vaccine, how many people will voluntarily take it and if they refuse what will the federal and state governments do?
Some argue that a quickly-developed vaccine cannot have been evaluated for longterm side effects. Furthermore, one survey notes that over three-quarters of Americans worry the vaccine approval process is being driven by politics. To counter this, some governments have discussed making a vaccine mandatory via various incentives and punishments, which of course just confirms fears of politization. It also presents a legal and ethical quagmire. For what it’s worth, Deutsche Bank’s proprietary survey shows that between 61 and 78% of people in various countries will choose to be vaccinated, however, there is strong disagreement on whether it should be mandated.
Looking forward, Reid expects to hear significant developments soon. Most vaccines plan to be (if not already) available for emergency use this autumn so we will likely hear feedback on effectiveness within weeks.
As the DB strategist concludes “this could create a very interesting political dynamic ahead of the US election. A roll-out announcement may boost Mr Trump but any move is likely to be highly politicized which may impact its early success.”