The invisible enemy advances

For now Covid-19 is winning against the human race as cases and fatalities increase exponentially. We shall beat it – eventually. And we shall emerge on the other side poorer but also wiser, writes Victor Hill.

April is the cruellest month, breeding
Lilacs out of the dead land, mixing
Memory and desire…

– TS Eliot (1888-1965), The Waste Land (1922)

April will yield depressing numbers

April 2020 will be a sombre month in the UK and indeed across the globe. The number of new cases diagnosed with Covid-19 and of fatalities from the virus is increasing exponentially at something like 15 percent per day. Even more worryingly, the fatality rate is actually still rising.

As I write (Thursday) the worst-hit countries thus far, apart from China (3,318 deaths), have been Italy (13,155), Spain (10,003) and the United States (5,112), though their mortality rates have differed widely. In the US New York State has been a particular hotspot.

All developed countries, with a few exceptions such as Sweden, have adopted a broadly similar strategy of national lockdown with varying degrees of severity. The policy debate – who acted most effectively and with most celerity – will no doubt last for years to come. And we don’t yet know how effective the lockdown strategy has been or how long it will have to last. Today, I just want to examine the nature of the invisible enemy.

Epidemiology for Dummies

Matt (Lord) Ridley is a science writer (amongst other things) who has made a reputation out of scientific scepticism. He thinks we should lighten up on climate change, falling sperm counts and ocean acidification…But on coronavirus he has been warning that the hardships ahead are like nothing we’ve known…[i]

The problem is that we allowed ourselves to imagine that infectious diseases – bubonic plague, smallpox, cholera, typhoid, measles, polio, whooping cough et al – had been defeated. We knew that there were new strains of animal-derived viruses at large – Hanta, Marburg, SARS, MERS, Ebola, swine flu, bird flu and Zika – but we thought, based on recent experience, that they were controllable. Yes, HIV/AIDS went global for about 20 years: but, by the beginning of this century, it was more-or-less under control thanks to prophylactic measures and anti-viral medications.

Then we thought that our very recently acquired ability to decode the genomes of all pathogens would protect us forevermore. But Mother Nature, in all her glory, came up with a particularly subtle killer. What is so nefarious about Covid-19 is that it is (a) highly contagious with an R0 value many times that of seasonal flu; (b) most carriers are asymptomatic – they don’t even know they have it, so they circulate normally; and (c) it has a significant mortality rate, especially for those – mostly the elderly – with compromised immune and respiratory systems. Early evidence from Iceland suggests that as many as 50 percent of all infections are completely asymptomatic.

The number of cases outside China has increased by tenfold roughly every ten days since the beginning of February. If it continues at this rate then 100 million people worldwide will have been infected by the middle of May.

Epidemiology is largely about statistical models (spreadsheet models, largely, rather than supercomputers) which is, kind of, what economists do anyway. True, there are inputs about how the pathology develops for which we are dependent on the men and women in white coats. But there is a lot of data out there for non-medics to analyse. In fact, never has a pandemic been more amenable to analysis in real-time, nor a pestilence been so well documented.

What is clear thus far is that Asian countries have been much more successful in containing the virus than Europe and North America. And there are huge variances in mortality rates – from nearly 12 percent in Italy to around one percent in Germany, even though those are both almost-neighbouring countries with equivalent living standards. (Italians live longer than Germans[ii] and – arguably – enjoy a higher quality of life.)

This huge variance has perplexed me greatly; and, as I shall explain soon, there is a lot going on inside the data. For today, I’d just like to share the following observations – which are as important for investors as for the millions of self-isolators out there alike.

The death rate – or, as I prefer the mortality rate (though the medical term is Case Fatality Rate or CFR) – is determined as the number of people proven to have had the virus divided by the number of people who have actually died from it. The latter is a known known – we can normally count the dead. But the former is much fuzzier because we have absolutely no idea how many people have contacted the virus in the first place. We would only know that for sure if we continuously tested everyone, which is not practicable at the moment.

But it seems certain that the combined number of people who either have had the virus and have recovered, or who have it and who display no symptoms, is very much higher than the number of recorded cases. In the case of the UK, the only cohort who has been widely tested thus far is those who are admitted to hospital with severe symptoms. And we have all heard anecdotally of friends and relatives who suffered at home without resorting to a hospital.

As I mentioned last week, a report signed off by Sunetra Gupta, Professor of Theoretical Epidemiology at the University of Oxford[iii], conjectures that the virus arrived in Europe much earlier than thought and that it could have infected as much as half of the UK’s population already. So there might already be a degree of herd immunity (though full herd immunity requires more like two-thirds of a population to have developed the antigen). We just don’t know.

Another model constructed by Edge Health last month showed that while there were only just under 10,000 confirmed cases in England on 26 March, the number of infections up to that date was at least 1.6 million. This model works backwards from an assumed mortality rate of 0.07 percent in London and 0.9 percent outside the capital (because the population is older).

As I write this the UK has recorded 29,474 cases of which 2,352 have died. That yields an implied mortality rate of 7.98 percent – a figure that has been rising steadily (it was 3.64 percent on 17 March). This is often contrasted with the mortality rate for seasonal flu which is generally thought to be around 0.1 percent (i.e. one in a thousand). But that would be misleading because we can be reasonably confident that there are hundreds of times more people out there who have been infected by CV-19 but who remain untested. So, in the final analysis, the mortality rate for Covid-19 might turn out to be similar to that for seasonal flu.

There’s another problem which is the way that deaths are recorded – and this varies widely from one country to another. As Dr John Lee wrote last week[iv], if someone dies of a respiratory infection in the UK, the specific cause of the infection is not usually recorded unless the illness in question is a notifiable disease.

Covid-19 is now a notifiable disease in the UK – along with smallpox (which is extinct anyway), plague and rabies etc. But flu isn’t – so the number of deaths caused by flu is under-reported. Conversely, there is a difference between Covid-19 causing death and it being found in someone who actually died of something else. And yet we know that the overwhelming number of people who die from Covid-19 have at least one underlying chronic condition. Toby Young points out that the average age of everyone in the UK who had died by Wednesday was 79.5 years – against average UK life expectancy of 81[v]. In Italy the average age of fatalities is 78.5 years.

It seems very likely that there will be a correlation between levels of smoking and CV-19 morbidity. The fact that men smoke more than women goes some way to explaining why men account for about two-thirds of global CV-19 fatalities. (Men also generate less immunoglobulin G than women – a key antibody.) It has been suggested also that Italy’s high mortality rate might be related to relatively low vaccination take-up there, partly on account of a strong anti-vaccination movement.

In the US, where the coronavirus death toll has doubled in three days to 5,112, the United States Centers for Disease Control and Prevention, shows that over this last winter since September 2019, flu has infected 38 million Americans, hospitalised 390,000 and killed 23,000. When I was in Florida in January, flu was a major topic of conversation. But there was no talk of lockdown on that count.

A possible explanation of the very low reported German mortality rate is threefold. Firstly, the initial cohort of German sufferers was young – many of them contracted the virus on skiing trips to Italy. Secondly, Germany has tested more people than any other country in Europe. Thirdly, there are reports that German doctors certify cause of death as the secondary or underlying infection rather than CV-19. But this week the number of fatalities in Germany spiked (179 new deaths on Wednesday) and it could well be that the mortality rate there will regress to the mean over time.

Reassuringly, no country has seen a perceptible rise in the overall death rate above what would be considered “normal” up until now (600,000 a year in the UK) – though that could change. One year or so from now, we might consider that the developed world over-reacted (though I am very concerned about the potential effect of the pandemic on Africa, which is well behind the curve). No doubt the policy implications will be the subject of debate for years to come.

The second wave

Most virologists think that the pan-national lockdown will be effective in the short term. But when we relax the lockdowns the number of new cases will begin to rise again.

In the medium term we shall have (a) an effective vaccine; (b) efficacious anti-viral medicines; and (c) better treatment for those who succumb to respiration failure – the most lethal symptom. So we shall get through this – and emerge wiser on the other side. This pandemic is going to be orders of magnitude less lethal than the Black Death (1340s) or the Spanish Flu (1918-20): but it will still cost hugely in human and economic terms.

One thing that we have learnt is that vaccine development has slowed. It is a laborious and expensive process which is not improving as fast as we need it to.

The Testing Test

The key to containing the virus and thus to end the lockdown will lie in testing. Thus far, the UK has tested a similar percentage of the population to the US and France, but far fewer people than in Germany and South Korea. Currently, the UK is testing about 8,000 per day but that is likely to rise to 25,000 a day by late April. There is a shortage of swabs and chemical agents.

Testing for coronaviruses is of two kinds. There are tests which detect the presence of virus antigens (i.e. those who are infected) and tests which detect antibodies produced in response to the infection (i.e. those who have recovered and are immune). We shall need both tests in vast numbers to get the job done.

Mr Farage (remember him?) put out a video on YouTube last Saturday which, while no doubt politically motivated (what would you expect?) addresses some salient issues around the UK Government’s response to the pandemic. Say what you will about him, but Mr Farage has always been well briefed – and he has good information about Italy.

The NHS is planning to use blood donated by recovered CV-19 sufferers to transfer to severe cases in hospital in order to boost immunity…Again, we have no idea what difference that will make.

Next week I shall take a look at the range of anti-viral medications already available and their manufacturers. It might turn out that a cure for CV-19 has been with us all along in the form of anti-malarials.

Prepare for a different world

We are NOT doomed. But in world and European history, pestilences (even relatively minor ones) have bad endings and even worse – traumatic epilogues, such as war. The well of China-US relations has been poisoned with fearful consequences that I shall discuss shortly. The anti-globalisation movement will gain momentum. While many pundits foresee a swerve to the left, with higher taxes, wealth taxes and the ineluctable advance of the Universal Basic Income (UBI), I foresee the advance of a more “right-wing” (though I hate that term) agenda.

That entails national resilience – for a start, every advanced country requires the resources to manufacture sufficient vaccines and medical equipment domestically. And any country that hands over its internet or steel industry to the Chinese needs its head examined. Open, or non-existent, borders facilitate the spread of infection and must be challenged. All immigrants should be subject to health checks: the prevalence of TB in the UK is an unacknowledged national scandal.

James and I will be releasing an MI Special Report soon that will guide investors through the unfolding emergency – and which will provide pointers as to how to prosper in the post-pandemic world.

Stay tuned.

***

While I have been writing this, more than 500 of my compatriots have died of this virus.

Eliot’s poem, the first line of which I used as an epigraph for this piece, is richly allusive. That line is a reference to the opening of The Prologue to The Canterbury Tales by Geoffrey Chaucer (1342?-1400) – which might also be said to be the opening line of English literature itself:

Whan that Aprille with his shoures soote,
The droghte of March hath perced to the roote,
And bathed every veyne in swich licóur…
Thanne longen folk to goon on pilgrimages…

Everything connects. And indeed I was planning my own pilgrimage in Holy Week – on foot from a pub in Southwark (the Tabard hostelry in Chaucer, which these days, incredibly, still exists in its 17^th century incarnation as the George) to the cathedral city of Canterbury – the epicentre of Christianity in England. The old Pilgrim’s Way has largely been resurrected and waymarked across Kent in the form of the North Downs Way – a national trail, parts of which I have hiked many times.

Alas, this pilgrimage will not now happen.

England with closed pubs and churches, for now at least, is diminished. But the vicar still disseminates her sermons and prayers in PDF format to the digital multitude. The village shop is still open; the tractors still traverse the fields…birds are feverishly nesting…

And, at times, the quietude is almost palpable.

[i] The Spectator, 21 March 2020. https://www.spectator.co.uk/article/we-are-about-to-find-out-how-robust-civilisation-is

[ii] See: https://en.wikipedia.org/wiki/List_of_European_countries_by_life_expectancy

[iii] See: https://www.standard.co.uk/news/health/coronavirus-half-uk-population-oxford-university-study-finds-a4396721.html?fbclid=IwAR3RHZeSvxjjw198DatHQgtTH3VkYdBap1oPDdoTdDmmDHBGulMdJg8-hEU

[iv] The Spectator, 18 March 2020. https://www.spectator.co.uk/article/The-evidence-on-Covid-19-is-not-as-clear-as-we-think