The main street and social media have attacked the concept of “herd immunity” as a “strategy” for combating Covid-19. They describe the strategy as one which just lets everyone get infected and whoever dies, dies (Washington Post, NY Times re: the August 2020 appointment of Dr. Scott Atlas to the WHTF), (Dr. Jay Bhattacharay, MD, Phd economics, Professor of Medicine, Stanford University on Google search results 10/24/20).
These arguments against herd immunity were advanced in opposition to the reopening of the economy and later in support of new economic lockdowns by certain Governors.
With the arrival of the Pfizer vaccine December 11, 2020 and the Moderna shortly thereafter, the argument has shifted to how many people need to be vaccinated before life can return to normal.
Herd immunity is not a strategy- it is a biological fact that applies to most infectious diseases (Dr. Bhattacharay).
It’s a known immunological phenomenon whereby enough people in a population have immunity to an infection, and so, by virtue of that, you break the chain of contagiousness toward the vulnerable (Dr. Atlas, former professor neuroradiology, Stanford University Medical Center, Senior Fellow, health care policy at Stanford’s Hoover Institution).
It is a term used to describe when enough people have protection- either from previous infection or vaccination– that it is unlikely a virus or bacteria can spread and cause disease (CDC: FAQ: 12/3/20).
December 7 2020
It appears clear from the CDC definition that herd immunity could be achieved without any vaccination!
This concept was further advanced by Dr. Frieden (Dir. CDC ’09-’17) on 12/5/20 when he stated the following: The fact that our own immune systems appear to work effectively against C-19 bodes well for the power of the new vaccines. This also means that the 20% to 25% of the US population (66mil to 83mil) that will have been infected before vaccinations become widely available appears likely to have at least some immunity for at least some time.
Another phenomenon of the Pfizer and Moderna vaccines is their 90%+ efficacy rate. This is far in excess of the 45% to 50% for other traditional influenza vaccines (CDC: 2/26/20: 2019-2020 seasonal influenza A and B viruses and influenza B/Victoria viruses, respectively; 37% effective influenza A (H1N1) — “swine flu”). This can be a game changer. It suggests fewer people will need to be vaccinated- maybe 50% fewer- to achieve the same coverage.
The CDC also states in its 12/3/20 FAQ that experts do not know what percentage of people would need to get vaccinated to achieve herd immunity to Covid-19.
The foregoing statistics suggest to us that herd immunity could be achieved with as few as 50% of the US population receiving the vaccine. If policy makers were to hyper focus on the truly “at risk”- as they seem to indicate- the level that could alleviate the risk of overwhelming the hospital system could be below 50%.
Politicians that call for ongoing lockdowns and other restrictions on normal life until nearly everyone gets vaccinated may be hard pressed to receive support for such a policy.
We believe the vaccines will change the public’s psychology regarding risk from the virus, thereby acting as a restraint on the worst instincts of some politicians.
The facts on hospitalizations will ultimately determine the effective level of vaccine coverage. If that coverage flattens the hospitalization curve, restrictions, by definition, must be lifted. Even prior to this, President-elect Biden said recently one of his first strategies in dealing with the virus is to reopen schools; perhaps this is a signal that many of the current restrictions will disappear with the advent of the new administration.
We believe the scattered restrictions currently in place will provide a modest drag on economic growth, but not cause a contraction. Therefore, we believe the financial markets will continue to look past this short term and focus on the resumption of strong growth by Spring ’21. There also remains the potential for an upside surprise from Congress with a new virus relief bill; possibly before year end, almost certainly right after inauguration day January 20, 2021.
Accordingly, the TAG and RPg strategies remain fully allocated to a pro- growth outlook in 2021.
Important Disclosures:
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Sources: Bloomberg.
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