There are signs that the coronavirus won’t be solved with vaccines

While the mRNA vaccines are a miracle, it is starting to look like the vaccines are only partially effective against new mutated versions of the coronavirus that are emerging.  Despite high rates of vaccinations (with non-mRNA vaccines) in Seychelles, authorities are implementing social restrictions because coronavirus infections are growing among vaccinated citizens.

It is possible that countries may see better results with mRNA vaccines since those vaccines are more effective.  However, the United Kingdom is a country with high rates of mRNA vaccinations.  Authorities there have labelled the Indian “double mutant” b.1.617.2 variant as a ‘variant of concern’ because it is rapidly spreading despite vaccination.

While there is a possibility that multiple vaccines will eradicate the coronavirus, the more likely outcome is that new vaccine-resistant strains will emerge.  Vaccines will likely offer limited cross-protection against future variants, causing mortality to be lower than what we’ve experienced.  While COVID-19 has been far less problematic than past diseases that ravaged humanity, the pandemic has been a massive economic problem because every Western society has a breaking point.  Even if authorities do not impose lockdowns (e.g. Sweden), citizens will impose social restrictions on themselves when the coronavirus surges in their country.

Historical experience

What we do know is that there are some infectious diseases that haven’t gone away from vaccination:

  • The flu (influenza).
  • IBV (infectious bronchitis virus) is a coronavirus that causes serious problems in the poultry/chicken industry.

Historical experience has shown that many different vaccine-resistant variants emerge due to mutations.  In the poultry industry, vaccination with multiple vaccines (against different variants) reduces the problem but does not make the problem go away.  In humans, the flu vaccine roughly lowers the risk of hospitalization by 40%.

The frustrating part of this situation is that we don’t have good science that would help us predict what will happen with the coronavirus.  We don’t know if future variants will be vaccine resistant in a way that makes the virus overly damaging in vaccinated individuals.

We also don’t know if the coronavirus will evolve into a deadlier disease.  One paper talks about how the “double mutant” B.1.617 variant is deadlier in hamsters than the B.1 variant.  There are some other pathogens like antibiotic-resistant MRSA that have evolved to become deadlier over time.

What we think we know about the coronavirus mutations

There are multiple scientific papers that talk about how antibodies are less effective on emerging variants.

  • The Indian “double mutant” B.1.617 variant evades antibodies induced by infection and vaccination according to Hoffman et al.
  • The South African B.1.351 variant has some resistance against antibodies created against the original coronavirus strain.  This study found that it isn’t neutralized at all by most monoclonal antibodies, which are synthetic antibodies used to treat COVID-19.  Monoclonal antibodies are copies of human-produced antibodies that were highly effective at neutralizing the original coronavirus.

Scientists theorize that there is a connection between antibody neutralizing ability and vaccine effectiveness.  (It could be the case that their theory is wrong and that something else causes vaccines to be ineffective, which would explain why mRNA vaccines from Moderna and Pfizer are more effective than other vaccines.)

As far as vaccines go, we know that they are less effective against the variants.  For example:

  • The Novavax vaccine is roughly 96.4% effective at preventing infection from the original strain, 86% effective against the UK B.1.1.7 variant, and 51% effective against the South African B.1.351 variant in patients without HIV.
  • Seychelles is a country where roughly 3 in 5 people are fully vaccinated with 2 doses of Sinopharm (inactivated vaccine) or Astrazeneca/Covishield (ChAdOx1-S recombinant vaccine).  Authorities have imposed social restrictions due to the spread of the coronavirus in the country.

Because serious illness and death from variants were rare in most studies (because very few people were infected by the most concerning variants), there isn’t yet good data as to the effectiveness of the vaccine against serious consequences.  It is likely that the vaccines are more effective at preventing serious consequences than they are at preventing infection.  The mRNA vaccine in Israel is roughly 95% effective at preventing infection and 97% effective at preventing death.

As time passes, more data will roll in on new variants.  We will eventually have a clearer picture of the truth.

Will life go back to normal?

One of two things would need to happen:

  1. Vaccines eradicate the coronavirus in developed countries.  Current evidence in Seychelles and the UK suggests that this will be highly unlikely.
  2. Mortality and serious consequences come down dramatically due to mRNA vaccines.  The level of cross-protection could be high enough that people decide to live with the coronavirus.

What might happen if the coronavirus is still somewhat deadly to the mRNA vaccinated

Right now, the world can be roughly divided into two strategies:

  1. Get close to zero COVID cases (“zero COVID”).  This is the strategy in Australia, New Zealand, Taiwan, Vietnam, Iceland, and a few other countries.
  2. Flatten the curve.  Implement social restrictions only as necessary to prevent hospital overcapacity.

The advantage of the zero COVID strategy is that contact tracing is more effective because contact tracers aren’t overwhelmed by a deluge of cases.  This allows society to keep cases flat with fewer social restrictions.  Some short-term pain is required as governments must impose strong/harsh social restrictions to get close to zero.

In theory, it is possible for a government to impose minimal social restrictions.  However, social restrictions happen anyways because citizens will stay home more when the coronavirus surges.  Self-imposed “lockdowns” have occurred in all countries with a “flatten the curve”-type strategy.

While the zero COVID strategy seems to work better in practice, there are structural reasons why more countries have not adopted it.  Government corruption tends to create government agencies that are filled with corrupt employees fighting each other over their share of corruption money.  Their incentives are focused on politics rather than good governance.  Sometimes, they will fight good ideas because it would make their political enemies look good (e.g. there are honest people advocating for evidence-based decision making).

In some jurisdictions like the United States, certain industries have lobbied the government for their industry to be deemed an “essential business”.  In California, restaurants have been forced to close while the film/TV industry continues to operate.  Film/TV production is clearly non-essential and should not have been declared essential.  The journalist Lee Fang has written about that form of corruption.

Corruption also affects border controls.  American farming operations and meat processing plants use a lot of cheap migrant labour (both legal and illegal).  The US likely will not stop the flow of migrant labourers across its borders because politicians would face conflict for intruding on a political faction’s money-making corruption scheme.  Because very few people are talking about these structural issues, they are unlikely to change in the short term.

If a mildly deadly pandemic continues, then I believe that social restrictions will become the new normal.  The zero COVID countries will continue to impose onerous border restrictions such as mandatory quarantines.  This will affect conventions (e.g. Informa PLC) and international air travel.

Social restrictions will come down… eventually

In the long run, the world will figure out which policies are effective at slowing the spread of the coronavirus.  While the scientific establishment continues to fight the idea that the coronavirus is mainly transmitted through aerosols, the world will likely shift to that viewpoint because it will allow society to operate with fewer social restrictions.  This means:

  • Outdoor activities instead of indoor activities.
  • Infrastructure.  Indoors spaces will be better ventilated, use HEPA filters, and possibly upper room UV light.
  • Better masks.

There will also be innovations in other pandemic tools such as cheaper tests (which enables more frequent testing), rapid tests, contact tracing smartphone apps, etc.

The future is uncertain

Whereas my posts on aerosol transmission were backed with solid scientific evidence, let me stress that there isn’t great science that will help us predict what will happen next.  For example, you can use Google Scholar and Sci-Hub to read up on “immune escape” (variants being resistant to antibodies) for well-studied coronaviruses like IBV.  Scientists don’t have good answers about predicting the evolution of a coronavirus or solving the immune escape problem; IBV continues to be a serious commercial problem for the poultry industry.

The mRNA vaccine could end the coronavirus problem.  Multiple mRNA vaccines against multiple variants might also end the coronavirus problem in the future.  Or, we might enter a new normal where the coronavirus is a part of our lives.  The best we can do is to guess at the probabilities.  Because I own plenty of call and put options, I personally don’t have to think too hard about whether the coronavirus will continue to help stock prices go up (or cause them to go down if market participants started trading based on fundamentals).


*Disclosure:  No position in Informa PLC (INF:LON).  I own a lot of puts on Delta Airlines (DAL).

Some interesting articles

SARS-CoV-2 Vaccines and Variants – This February presentation provides a lot of excellent information on variants from a researcher in the field.  Paul Bieniasz and his colleagues used genetically-engineered viruses to predict what variants would become dominant in the real world.

Growing plasma, remdesivir use will help Covid virus mutate, become stronger: Ex-ICMR scientist

Covid-19: The E484K mutation and the risks it poses

The EU’s CDC has a threat assessment brief stating its official position on emerging variants.

8 thoughts on “There are signs that the coronavirus won’t be solved with vaccines

  1. There is no point in worrying about things you cannot control. An businessowner would understand this. You keep monitoring scientists and trying to predict the future. This is not a good practice. A businessowner would ignore scientists. Like journalists, scientists are paid to make noise. The more, the better (for them). There are many things that nobody knows for sure. Who cares about how the coronavirus will evolve? Most likely, it is not as important as most people think. Instead of predicting future outcomes, make your success independent of any outcome. Not with options, but by owning strong businesses that can adapt and reinvent themselves under any circumstances. You would be better off focusing your attention on your own strengths and on topics that neglected and overseen by the mass.

    • @ Patrick Harper
      That’s an excellent point. Thank you.
      Speaking of things outside one’s control, this name is the same name with whom i had online interactions (another site in 02 2018) about QE. The point maybe4less was making then is that the Fed had helped to engineer a debt swap between public and private entities. Then i had suggested that the setup had an embedded moral hazard for further unsustainable leveraging at large.
      Numbers (USA, 1-household debt over GDP, 2-federal debt over GDP, 2+3 over GDP
      end 2007: 99%, 62%, 161%
      02 2018: 76%, 104%, 180%
      now: 79%, 129%, 208%
      Private entities, individually and collectively, have abdicated responsibility for debt to ‘others’ and we will tend to suffer, also as business owners.
      T-cell mediated immunity is a very interesting topic and those pushing for this aspect in the course of 2020 vs herd immunity have tended to wildly overestimate this component. i also find that it would be interesting that you expand on that.

    • Looking back at 2020, I correctly predicted that the popular narrative about the coronavirus going away during the summer was wrong. Most people underestimated the virus’ economic impact. At the same time, it turns out that recovery plays would significantly outperform the market (!!). AMC outperformed even though the company stopped paying rent. So I don’t know. I’m certainly using options to speculate on fundamentals mattering again.

      It does seem like you have a bias towards a specific investment style (e.g. no options). That’s fine but I don’t believe that we should be blinded by our biases.

  2. Pingback: Ivermectin will be huge in the fight against COVID – Glenn Chan's Random Notes on Investing

  3. Hi GlennC, thank you for your insights. I have been reading scientific papers by the score since COVID emerged to try and understand the virus and the appropriate response, and I think you are on the money as far as the science goes, which is outstanding for a business investor…Regards, Stephen BSc

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