Journal of the Plague Years XX: The Long Tail

Wovon man nicht sprechen kann, darüber muß man schweigen.
Whereof one cannot speak, thereof one must be silent.

Ludwig Wittgenstein (1889-1951), Tractatus Logico-Philosophicus (1920).

OMG it’s Omicron!

It should have been the Greek letter χ (“xi” or “chi”) but that, the WHO deemed, might have upset the Communist Party of China. So, they plumped for omicron, which may sound like a leading brand of lavatory disinfectant but is, in fact, the latest incarnation of the coronavirus, coming all the way from southern Africa to an aerosol stream near you.

That is, to say the least, frustrating, since we had begun perhaps foolishly to imagine that we were on top of things. Life was getting almost back to normal. The British Prime Minister had felt carefree enough to visit Peppa Pig World (dedicated to an imaginary animal he admires even more than Kermit the Frog whom he invoked during his address to the United Nations) and wanted to tell everyone about it.

This time Mr Johnson, and his increasingly restive parliamentary supporters, know that any false move – a perceptibly delayed new lockdown – will be hailed by Labour and its proxies as evidence of the Tories dithering incompetence, contempt for public health and lack of compassion for the sick etc. Last spring Johnson & Co. were deemed remiss by not banning flights from India in response to the new delta variant. So this time flights from South Africa were halted precipitously. In this way, as the entire political class seems determined to fight the last war, without considering the nature of the one in play.

At least we are no longer being told to wash our hands – though, personally, I am very keen on handwashing. The virus transmits itself through the air. Sorry to be crude, but you contract it by breathing in the spittle of the person sitting next to you.

There are about 200 species of virus which transmit the common cold, but none of them is dangerous to people with intact immune systems. In both the “Spanish Flu” epidemic of 1918-20 and the “Russian Flu” epidemic of 1889-90 (which some biologists think was a coronavirus) there were two waves of deaths before the pathogen settled down to become an endemic but mild version of flu. Given the gap of nearly 30 years between these two pandemics most people under the age of 30 had no viral immunity and they are the ones who died in the greatest numbers.

Now many European countries are back in partial lockdown – with a wave of public protests in response, sometimes violent as in the Netherlands. Some European countries (Austria, Greece amongst them) are moving towards making vaccination compulsory – something which is anathema to the libertarians.

It’s a good moment to take stock of where we are.

Known Knowns

We think that the alpha variant (first identified in Kent, UK) spread about twice as fast as the original Wuhan strain identified in January 2020; delta (identified in India) spread twice as fast as alpha; omicron might have doubled that transmission speed again. The fear last week was that omicron might be more infectious than delta and better at dodging antibodies than beta. But we won’t know this for sure until we have tracked its evolution.

Science writer and thinker Matt (Lord) Ridley speculated this week that omicron may have arisen as a result of modern medical treatments such as polyclonal and monoclonal antibodies used in therapy. It seems that omicron’s most radical mutations are concentrated in parts of the spike protein where they help it evade such antibodies. It may be that lockdowns across the world have delayed the virus from evolving into something more benign – as is normal in virology. Mr Johnson said this week that working from home is “unnatural”. I would take issue with that; but it seems to me that lockdowns – preventing people from interacting face-to-face – are entirely unnatural. We also know that, just as for the Spanish Flu epidemic, hospitals are hotspots of infection. Unlike viruses transmitted through insects, sex or water, respiratory viruses, Matt Ridley reminds us, tend to evolve into mild but highly infectious pathogens.

About 5.25 million people have died of the virus worldwide thus far. But it is widely agreed that Covid-19 is close to becoming endemic just as flu is. Endemic diseases are more prevalent in winter that in summer – that is why the vulnerable are encouraged to have their flu jabs in October. In our favour, we have genomics now, so we can map the genome of each new variant precisely and analyse its biochemistry. But of course, that will not be sufficient to eliminate it. People will still die of some variant of Covid-19 in years to come – but fewer and fewer of them. That is why it is appropriate to speak of a long tail on the mortality curve.

Known Unknowns

The poor politicians don’t know what’s going to happen next: but they do know that they shall be pilloried if they are not manifestly seen to be doing something serious (not a word that is associated with Mr Johnson these days) about the latest development.

As of now, there is insufficient data about how bad the omicron variant is. According to medics in South Africa, it just causes a runny nose; though one report from Gauteng Province, where cases are surging and hospitalisations are up sharply, suggested that otherwise healthy unvaccinated men had complained of exhaustion.

But according to Moderna CEO Stéphane Bancel, its mRNA-based vaccine is still likely to work, though it may have reduced effectiveness; and Pfizer thinks it will have a modified vaccine available by late February. BioNTech CEO Dr Ugur Sahin had a simple message: “Don’t freak out”. We won’t know how virulent omicron is until several hundred cases have been tracked from infection to recovery.

So, the political classes in the democratic West, which have now had nearly two years to play this game, must use lockdown-style language and impose lockdown-style measures without, if possible, going back to full-scale lockdowns. Thus, the wearing of masks becomes compulsory again; international travel is effectively cancelled (unless you want to be quarantined in a hotel); and we are told to avoid unnecessary socialising. (I wonder which types of socialising are necessary and which are not).

On Tuesday, Mr Johnson re-appeared on his Covid podium. His address was laden with portent. Yet this is likely to be a much more normal Christmas than the weirdness of last year. The PM insists we should not cancel our Christmas plans but rather wants to focus on “measures at the borders” (something he consistently refused to impose in 2020).

We know that vaccination is effective in terms of reducing the severity of infection as reflected by hospitalisations. Most cases of severe infection since the summer have been amongst the unvaccinated (that is people who have refused to be vaccinated or may not be so for medical reasons). The higher the level of vaccination, the lower the level of mortality. However, even though we don’t know if the current crop of vaccines will work as efficaciously against omicron, it seems likely that an on-going booster campaign will raise immunity against it.

Omicron may yet turn out to be milder than delta. When the UK re-opened in July this year – against the advice of many of the so-called “experts” – the most pessimistic expectations of the modellers were proven wrong. Positive tests in England peaked in October and are currently down about 20 percent from that level (though they have spiked again over the last week). The high number of positive results was partly driven by the testing of schoolchildren who remained asymptomatic. As of last week, hospitalisations were running at 17 percent below their October level. Cases are falling in the UK because the groups which were driving numbers up (such as schoolchildren) have now been infected, so the virus is running out of new people to infect.

Also, we know that immunity wanes over time after vaccination, but we do not know how long the gap between the initial vaccinations and the follow-up booster jab should be. Nor is it clear whether we might need ongoing booster jabs indefinately – something that I suggested might be likely more than one year ago. In the UK, the rollout of the booster vaccination programme has been halting and subject to repeated changes of policy – not at all at the level of competence of the initial vaccination programme. That was partly because the infrastructure for the initial vaccination programme – large numbers of dedicated venues with highly motivated volunteer staff – had been disbanded. It was only on Wednesday that Pfizer CEO Albert Bourla told the BBC that we would need regular boosters – though we do not know what the effect of regular inoculations on the immune systems will be long-term.

This reminds us that most of the pandemic management in the UK and elsewhere has been made on the hoof or, should I say, reactive in nature. The UK government minister responsible for the booster campaign is of a retiring disposition. I doubt that more than one in 100,000 members of the general public even know her name. We know there is someone in charge, but we don’t know who she is.

Last week Mr Johnson commanded that the booster campaign be stepped up such that all over-40s will receive a booster jab by next spring. In parallel, there is a campaign to encourage the unvaccinated to get their first and second jabs.

I suspect that advanced countries will continue to vaccinate against Covid-19 on an annual basis going forward, just as they do for flu. That will beg the question for AstraZeneca as to whether it continues to provide the vaccine pro bono. Those who advocate that developed countries be granted as many vaccines as they need will argue that the doubly and triply vaccinated are obstructing the rollout of vaccinations in the developing world. However, even if our vaccine stocks were transferred to low-income countries, it is doubtful that they would have the infrastructure to administer them – and certainly not in an equitable manner. A large proportion would be wasted.

Unknown knowns

It is not clear why the UK is faring better this time round than our European peers. In the early stages of the pandemic, the UK was widely seen as having higher mortality – but not now. Although there are still many people testing positive for Covid, which is partly a function of the scale of testing, hospitalisations are well down. The dominant variant of last winter, alpha (originally known as the Kent variant), now seems to be extinct.

The UK has recorded over 145,000 deaths from Covid – that equates to 2,122 deaths per million people. That is less than the USA (2,412) though slightly more than France (1,821). Pascal Soriot, CEO of AstraZeneca offered a possible explanation last week. He suggested that the durability of T-cells produced in older people further to the AZ-Oxford jab could be keeping them safer. He was not able to produce data to support this idea, though some studies have confirmed that the AZ-Oxford adenovirus jab induces a better T-Cell response than Pfizer and Moderna’s mRNA-based vaccine. Although a paper published last week in Nature by University Hospital, Tübingen contradicts this.

Another theory is that Britain has now come close to that elusive goal of “herd immunity”. Under laws passed by the House of Commons on Tuesday, anyone who tests positive for the new variant in the UK will be obliged to self-isolate for ten days regardless of their vaccination status. And even those who have been in contact with those testing positive must now self-isolate. These new rules will endure until March. This risks the possibility of a new “pingdemic” over the Christmas period – where businesses will struggle to deliver goods and services because of absent staff, as happened over the summer. Significantly, fewer Brits are downloading the NHS Covid app, perhaps for fear that they might get pinged.

Effective vaccines prevent infection by bolstering immunity; they prevent clinical symptoms and thus hospitalisation; and thirdly they reduce transmission of the pathogen. Different immune responses – antibody and T-cell production – result in different forms of immunity. According to Oxford’s Professor Sunetra Gupta, focussing on a single immune response can distort our view of the pandemic. She argues that antibody studies carried out in the UK last year may have significantly underestimated exposure to Covid-19 pre-lockdown. This is for two reasons. First, antibodies wane quickly; and second some people fight off infection without developing antibodies at all. She notes that the vaccines we have deployed are “effective at preventing life-threatening illness but do not meaningfully contribute to the maintenance of herd immunity”. She therefore concludes that we should prioritise vaccines which prevent death but not necessarily infection.

We do not know how permanent or how severe the damage inflicted by restrictions on our “normal” daily lives will be. Even though we do know that such restrictions have already done much harm in terms of health, wealth and happiness. Just look at the business failures, the divorces and the lengthening queues for treatment at the NHS.

Unknown unknowns

We cannot know the nature of the next global pandemic, even if we might be able to prepare for it on the basis of what we know about this one – knowing, of course that, like this time round, we might in future be well prepared for entirely the wrong type of pathogen. We shall not be able to prevent the next pandemic until we fully understand the origins of this one: yet for Lord Ridley in his new book, having examined the entire body of evidence, the trail has gone cold. It is too much of a coincidence that the virus was first observed in Wuhan, the site of the world’s most active lab working on SARS-type viruses.

Will Covid-19 one day be classified as “the first of the modern pandemics”? We cannot know; but, if we believe that the density of human population on this planet and the consequent degradation of biodiversity is a recipe for plague, then one can easily conjecture that this will be the first of many more. There seems to be no confirmed will on the part of the Chinese authorities and others to close the disgusting “wet markets” where wild creatures are sold live to be taken away, cruelly slaughtered, amateurishly butchered and then cooked and eaten. At least the South Koreans have made moves in the direction of banning outright the sale of dog meat recently.

Early on in this Journal, I described how the influenza epidemic of 1918-20 was regarded by governments at that time as an act of God which could not be assuaged by policy. In the second decade of the 21st century, however, governments are expected to be risk-averse and to minimise mortality – even if they are widely regarded with contempt by their own electors.

Market jitters

Those of us who do not believe that financial markets are always “right” can now affirm that since the inception of the pandemic the equity markets have consistently got it “wrong”; or at least they have got it right at the wrong moment (which ultimately is the same thing).

This week there have been significant drawdowns on big-cap stocks in the US markets in response to new travel restrictions. Volatility is increasing. The omicron shock has coincided with the long-expected tightening of monetary policy by the Fed in response to rampant inflation which no longer looks quite so “transitory”. (As I predicted in the early summer). With the “tapering” of QE, rate rises now look certain in 2022.

In the UK, the newest Monetary Policy Committee member, Catherine Mann, said that omicron could trigger a jump in demand for already scarce household goods such as home entertainment and further disrupt supply chains. Brent crude fell by 5.3 percent on Tuesday to below $70 per barrel. But, counter-intuitively, the dollar did not rebound as a “safe haven” currency.

City and skiing break bookings with easyJet are already down although demand for summer holidays next year is still buoyant. The airline reported a loss of £1.1 billion in the year to September as against a loss of £835 million in the previous year. Efforts by Virgin Atlantic to raise £400 million in rescue funding were thrown into doubt. Restaurants and hotels are reporting widespread cancellations in what should be their busiest month.

On the biotech front, shares in BioNTech are up since omicron arrived and so are those in Moderna which rose by 15 percent on Monday before falling back. Moderna is one of the best performing S&P-500 stocks this year and is now worth $123 billion – still much smaller than Pfizer which has a market cap of nearly $300 billion. AstraZeneca has not done so well, even though its pipeline of new oncology drugs looks as impressive as ever, and earnings are forecast to grow at a clip of 20 percent per annum according to OrbiMed, a specialist healthcare investor.

The possibility of March 2020-style coronavirus panic sell-off have increased markedly this week. At the very least, we are headed into a period of more pronounced market volatility with declining fundamentals. It is time once again for investors to adopt a defensive stance.

I was planning to spend the week before Christmas in Switzerland but that’s not going to happen now. The last foreign holiday I took – and the last flight – was 23 months ago; but now it’s going to be a more than two-year hiatus until I get to my next departure gate. (I console myself by thinking of all that CO2 for which I am not responsible). I keep looking at the Zermatt Matterhorn webcam with its day-long scans of the live-time snowscape and wondering when I shall see that majestic mountain again close-up.

Never mind. I won’t miss the village carol concert after all, with its message of eternal hope.

Listed companies cited in the article which merit further investigation:

• BioNTech (NASDAQ:BNTX)
• Moderna (NASDAQ:MRNA)
• AstraZeneca (LON:AZN)
• easyJet (LON:EZY)