Forget about omicron – markets fear inflation and monetary tightening the most
Investing is still the art of calculated risk based on imperfect knowledge, and epidemiology is no different. Based on what we know so far, the likelihood of investment is that omicron is, if at all, the solution to the pandemic: a variant that is spreading like wildfire but with symptoms for the disease. Most benign, delivering a short and brutal shock which paves the way for a rapid return to normal life. It’s bullish, ceteris paribus, but it also implies a hotter global economy in 2022 and therefore a quicker end of the easy money.
China may have to miss the recovery party. The regime cannot keep such a transmissible variant out of the country without tight isolation. The latest Hong Kong study found that the Sinovac jab offered no antibody defense against omicron.
In a sense, China is stuck with the success of its zero Covid policy, oversold at home as a propaganda triumph. He is forced to opt for scorched earth removal rather than testing his vaccines. China may be the biggest economic loser in the pandemic, trapped in semi-stagnation as the world moves forward, in stark contrast to conventional wisdom a year ago.
Clinical evidence from Discovery Health in South Africa – three weeks after starting omicron – is that double vaccination leads to 70% protection against hospitalization, and only 5% of those admitted need intensive care against 22% for the delta. The first-line antibodies can drop, but the memory of the back-guard B and T cells works like a charm.
Professor François Balloux, director of the UCL Genetics Institute, also has a few sweet mockeries for those who claim to control events. “There is something touching about our attitude towards Covid-19, like a child on a beach, cursing the incoming waves and proud every time we back out to sea,” he said.
Unlike markets, politicians and health authorities cannot act on probability alone. They must take into account extreme extreme risks. Virologists still know exactly where the omicron sits on the virulence spectrum. A slight change in the number can lead to markedly skewed results in either case. Modeling from the University of Sussex shows the UK death range of this wave to be 9,460 to 171,000, depending on the degree of vaccine escape, the effectiveness of the booster and countermeasures taken to slow the spread.
Personally, I would have voted for the Prime Minister’s Plan B as an insurance policy. These are light measures when opposed to rampant coercion in parts of Europe, where mandatory jabs and abbreviated human rights for the unvaccinated are almost becoming de rigueur.
But I also share the suspicion of these 100 Tory rebels that the numbers are handpicked to raise alarm bells, and that we are bracing for an unnecessary winter crisis that will push thousands of small businesses to the brink. Nearly 96pc of the population already has Covid antibodies, and therefore T lymphocyte memory. More than 24 million people have been recalled, essentially covering the entire cohort of vulnerable people.
One is tempted to ask: if it had not been for the mass tests, would the nation as a whole even be aware of this omicron wave? But that is uttering heresy in the age of Covid.