The race is on for a COVID-19 vaccine.
Russia has one. Keen on trying it? No? Me either.
The Donald wants one before the presidential Election Day…a mere seven weeks away. Our PM has inked a deal, so we’ll gain priority access to an approved vaccine.
But how keen will you be to line up for your shot or could it be series of shots?
Well, according to research conducted by Suffolk University, most people — 73% — said that when a vaccine becomes available, they’re going to be real polite and insist ‘oh no, you go first’.
Source: Geopolitical Futures
The vaccine being co-developed by Oxford University and AstraZeneca has been the lead contender in the race to defeat COVID-19.
Vaccine suffers setback
The trial suffered a setback last week when a patient experienced symptoms associated with a rare spinal inflammatory disorder.
However, according to ABC News on 13 September 2020, testing is back on track:
‘Oxford University has announced it will resume a trial for a coronavirus vaccine it is developing with pharmaceutical company AstraZeneca after getting the green light from safety watchdogs.
‘The late-stage trials of the experimental vaccine were suspended last week following a reported side-effect in a UK patient.
‘In a statement, the university confirmed the restart across all of its UK clinical trial sites.’
And the hope of a vaccine was enough to give our market a shot in the arm yesterday…
Source: ABC News
There’s a lot riding on the discovery of a vaccine…election outcomes, resumption of the old ‘borrow and buy’ economic growth model, continued and uninterrupted asset price appreciation.
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But I get the feeling markets are getting carried away with a serious case of ‘overpromise and under-delivery’.
In the 22 June 2020 edition of The Gowdie Letter I wrote:
‘The great hope is that the economic body will be able to repair itself to the point these prescribed [welfare and debt moratorium] programmes can be (largely) withdrawn without another severe contraction in economic activity.
‘But time is not on the policy makers side.
‘OECD Economic Outlook June 2020
‘The OECD’s best-case scenario — on when we might return to pre-COVID economic output — is predicated on this great hope.
‘The latest OECD report is titled “The World Economy on a tightrope”.
‘To quote from the report (emphasis added):
“The global outlook is highly uncertain.
“The COVID-19 pandemic is a global health crisis without precedent in living memory. It has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs and well-being.
“The lockdown measures brought in by most governments have succeeded in slowing the spread of the virus and in reducing the death toll but they have also frozen business activity in many sectors, widened inequality, disrupted education and undermined confidence in the future.
“As restrictions begin to be eased, the path to economic recovery remains highly uncertain and vulnerable to a second wave of infections.
“With or without a second outbreak, the consequences will be severe and long-lasting.”
‘The OECD forecast is based on two scenarios…
- “single-hit” — the one and done — COVID-19 shutdown.
- “double-hit” — a second-wave shutdown.
‘Under the single-hit scenario, recovery — which is defined as just getting “back to where we were” — is at least 18 months to two years away.
‘If, however, there’s a second-wave shutdown, then recovery is pushed further into the future.
‘What’s the probability of a second wave?
“We can only look at what other seasonal coronaviruses and seasonal influenzas do. Based on that, most of us feel comfortable there will be a second wave.”
Dr. Gregory Poland (studies the immunogenetics of vaccine
response in adults and children) at the Mayo Clinic.
‘“Spring undoubtedly helped us,” Prof Jonathan Ball, a virologist at the University of Nottingham says.
“A second wave is almost inevitable, particularly as we go towards the winter months.”
BBC News 21 June 2020
‘Given what we’ve seen recently in Victoria and other parts of the world, the odds of a second wave are probably 50/50.
‘Can a vaccine be identified AND commercially developed AND administered between now and when the Northern Hemisphere enters its next flu season?
‘This chart is from the US Center for Disease Control and Prevention…
‘The clock is ticking.’
According to yesterday’s Sydney Morning Herald, the second wave is already gathering momentum before winter hits the Northern Hemisphere…
To quote from the article:
‘Coronavirus infections continue to rise across Europe, with France, the UK, Austria and the Czech Republic now all fighting second waves.’
Based on the OECD ‘double-hit scenario’, the prospect of the global economy being back to pre-COVID levels is going to be years away.
Yet, the US share market is already back (or very close) to its pre-COVID record high. Something is not making sense here.
Was the (pre-COVID) record high US market UNDERvalued in February 2020? After a 10-year bull market, that’s unlikely. The US market was more than fully priced.
So if the US market, based on pre-COVID economic activity, was OVERvalued in February, what does that say about the current post-COVID market?
The not too technical term of ‘OVER-OVER-OVERvalued’ comes to mind.
What’s going to happen?
Will a vaccine be discovered?
Will a vaccine be discovered, and we recover from our economic ills? Or, will the market lose its immunity to a virus-affected economy?
My money is on the latter.
The timeline for a vaccine is much longer than people expect.
Governments may want one today, but that’s not how it works.
Phase 3 trials for a vaccine take time.
Unlike normal pharmaceutical drugs that are developed to make sick people well, vaccines are designed to make well people sick…to build up immunity.
When you start introducing foreign matter into the body, there can be unexpected complications.
Source: Oxford Journals
What is Guillain-Barré syndrome (GBS)?
According to the report…
‘[GBS] is an uncommon disorder of the peripheral nerves that classically causes ascending limb paralysis and, in severe cases, respiratory failure and death.’
To quote from the Abstract of the report (emphasis added):
‘Because of widespread distribution of the influenza A (H1N1) 2009 monovalent vaccine (pH1N1 vaccine) and the prior association between Guillain-Barré syndrome (GBS) and the 1976 H1N1 influenza vaccine, enhanced surveillance was implemented to estimate the magnitude of any increased GBS risk following administration of pH1N1 vaccine.
‘The authors received 411 reports of confirmed or probable GBS.’
The reported GBS cases was minimal compared to the numbers vaccinated, but the report highlights that vaccines are NOT risk-free.
Which is why stringent testing must be carried out to ensure any unwanted side effects are reduced to an absolute minimum.
Pharmaceutical companies will not want to rush anything to market for fear of reputational damage and being embroiled in global class action lawsuits…unless of course governments provide them with blanket immunity.
Which would only make people even more reluctant to line up for a shot ‘what does the government know that we don’t?’.
Assuming the approved vaccine goes through the proper rigourous testing process, even then, 73% of people are either saying ‘no’ or ‘you first’.
Getting back to anywhere near normal is going to be many years into the future. The market has gotten way ahead of itself.
Markets may be hoping for the best, but investors should be preparing for the worst.
Editor, The Rum Rebellion