Arable farmland is being bought up by institutions and wealthy individuals at a rapid rate. Why do investors want a down-to-earth asset class in their portfolios?
Project Helvetia, an experiment between the Bank for International Settlements Innovation Hub Swiss Centre, the Swiss National Bank (SNB) and the financial market infrastructure operator SIX, successfully shows the feasibility of integrating tokenised assets and central bank money.
The project demonstrates the functional feasibility and legal robustness of settling tokenised assets with a wholesale CBDC (PoC1) and with linking a DLT platform to existing payment systems (PoC2) in a near-live setup.
The experiment should not be interpreted as an indication that the SNB will issue a wholesale CBDC.
"We've killed it," drawls a grand client at a fancy hairdresser in Delhi. "Covid came to India but we were so grubby and diseased it just bounced off, rolled over and died." The hyperbole elicits a round of chuckles, as it was meant to.
Such glibness might seem tasteless, considering an official national death toll of nearly 160,000, as well as ominous signs that India is on the cusp of a second wave that its vaccination drive may be too slow to suppress. Yet as a share of its nearly 1.4bn people, the tally is minuscule, despite a huge outbreak.
A national survey of blood samples suggests that by December some 22% of Indians had been exposed to covid-19, 30 times the official tally of around 11m cases to date.If that estimate is right and if India's fatality rate had been as high as, say, Britain's, there would have been some 10m deaths.
The Economist | Getting off lightly https://www.economist.com/asia/2021/03/13/india-seems-to-have-suffered-surprisingly-few-deaths-from-covid-19?frsc=dg%7Ce
If you are playing the odds, this is actually a good time to buy the dip if you haven't done so already.
From Ecoinometrics - March 08, 2021 - ecoinometrics.substack.com
The fact that Bitcoin seems to keep up with the rise of interest rates is definitely a good sign. This means that adoption remains the main driver of this cycle.
If you believe that to reach its natural market size (physical gold) Bitcoin has 10x more to grow then you aren't worried about the temporary rising yield situation.
I'm saying temporary because you have to guess that the Fed will have to do something at some point. By something I mean implement some form of yield curve control.
Apparently we aren't there yet. But if rising yields start causing serious problems for mortgages or trigger a new stock market crash then you can bet that as usual the Fed will act.
Let's monitor and see how this plays out.
Drawdown
I've just said that Bitcoin is doing fine in the face of rising bonds yields but it is true that we are still in a drawdown.
Of course drawdowns are not unexpected in a bull market.
Every time you get a sharp rise in price some people will take profit, you'll get a temporary correction and then we'll be back up until traders are exhausted again.
That's a natural function of the market, it doesn't mean that the bull phase of the cycle is over.
In that regard this dip is typical of what we have seen in previous bull markets:
A 25% drop that has so far lasted 15 days.
The last one in January was 30% and lasted a month.
As you can see on the chart below drawdowns in the 20% to 40% range can last anywhere between a few days to 3 months. So if you look at the stats and think about the fundamentals there is really nothing to be worried about.
Affluent parents, terrified of running afoul of the new orthodoxy in their children’s private schools, organize in secret.
The Miseducation of America’s Elites | City Journal
By Bari Weiss
March 9, 2021 Education The Social Order
The dissidents use pseudonyms and turn off their videos when they meet for clandestine Zoom calls. They are usually coordinating soccer practices and carpools, but now they come together to strategize. They say that they could face profound repercussions if anyone knew they were talking.
But the situation of late has become too egregious for emails or complaining on conference calls. So one recent weekend, on a leafy street in West Los Angeles, they gathered in person and invited me to join.
In a backyard behind a four-bedroom home, ten people sat in a circle of plastic Adirondack chairs, eating bags of Skinny Pop. These are the rebels: well-off Los Angeles parents who send their children to Harvard-Westlake, the most prestigious private school in the city.
By normal American standards, they are quite wealthy. By the standards of Harvard-Westlake, they are average. These are two-career couples who credit their own success not to family connections or inherited wealth but to their own education. So it strikes them as something more than ironic that a school that costs more than $40,000 a year—a school with Charlie Munger, Warren Buffett’s right hand, and Sarah Murdoch, wife of Lachlan and Rupert’s daughter-in-law, on its board—is teaching students that capitalism is evil.
For most parents, the demonization of capitalism is the least of it. They say that their children tell them they’re afraid to speak up in class. Most of all, they worry that the school’s new plan to become an “anti-racist institution”—unveiled this July, in a 20-page document—is making their kids fixate on race and attach importance to it in ways that strike them as grotesque.
“I grew up in L.A., and the Harvard School definitely struggled with diversity issues. The stories some have expressed since the summer seem totally legitimate,” says one of the fathers. He says he doesn’t have a problem with the school making greater efforts to redress past wrongs, including by bringing more minority voices into the curriculum. What he has a problem with is a movement that tells his children that America is a bad country and that they bear collective racial guilt.
“They are making my son feel like a racist because of the pigmentation of his skin,” one mother says. Another poses a question to the group: “How does focusing a spotlight on race fix how kids talk to one another? Why can’t they just all be Wolverines?” (Harvard-Westlake has declined to comment.)
This Harvard-Westlake parents’ group is one of many organizing quietly around the country to fight what it describes as an ideological movement that has taken over their schools. This story is based on interviews with more than two dozen of these dissenters—teachers, parents, and children—at elite prep schools in two of the bluest states in the country: New York and California.
The parents in the backyard say that for every one of them, there are many more, too afraid to speak up. “I’ve talked to at least five couples who say: I get it. I think the way you do. I just don’t want the controversy right now,” related one mother. They are all eager for their story to be told—but not a single one would let me use their name. They worry about losing their jobs or hurting their children if their opposition to this ideology were known.
“The school can ask you to leave for any reason,” said one mother at Brentwood, another Los Angeles prep school. “Then you’ll be blacklisted from all the private schools and you’ll be known as a racist, which is worse than being called a murderer.”
One private school parent, born in a Communist nation, tells me: “I came to this country escaping the very same fear of retaliation that now my own child feels.” Another joked: “We need to feed our families. Oh, and pay $50,000 a year to have our children get indoctrinated.” A teacher in New York City put it most concisely: “To speak against this is to put all of your moral capital at risk.”
Parents who have spoken out against this ideology, even in private ways, say it hasn’t gone over well. “I had a conversation with a friend, and I asked him: ‘Is there anything about this movement we should question?’” said a father with children in two prep schools in Manhattan. “And he said: ‘Dude, that’s dangerous ground you’re on in our friendship.’ I’ve had enough of those conversations to know what happens.”
That fear is shared, deeply, by the children. For them, it’s not just the fear of getting a bad grade or getting turned down for a college recommendation, though that fear is potent. It’s the fear of social shaming. “If you publish my name, it would ruin my life. People would attack me for even questioning this ideology. I don’t even want people knowing I’m a capitalist,” a student at the Fieldston School in New York City told me, in a comment echoed by other students I spoke with. (Fieldston declined to comment for this article.) “The kids are scared of other kids,” says one Harvard-Westlake mother.
The atmosphere is making their children anxious, paranoid, and insecure—and closed off from even their close friends. “My son knew I was talking to you and he begged me not to,” another Harvard-Westlake mother told me. “He wants to go to a great university, and he told me that one bad statement from me will ruin us. This is the United States of America. Are you freaking kidding me?”
Photo: Olga Kurbatova/iStock
These are America’s elites—the families who can afford to pay some $50,000 a year for their children to be groomed for the eating clubs of Princeton and the secret societies of Yale, the glide path to becoming masters—sorry, masterx—of the universe. The ideas and values instilled in them influence the rest of us.
That is not the only reason this story matters. These schools are called prep schools because they prepare America’s princelings to take their place in what we’re told is our meritocracy. Nothing happens at a top prep school that is not a mirror of what happens at an elite college.
What does it say about the current state of that meritocracy, then, that it wants kids fluent in critical race theory and “white fragility,” even if such knowledge comes at the expense of Shakespeare? “The colleges want children—customers—that are going to be pre-aligned to certain ideologies that originally came out of those colleges,” says a STEM teacher at one of New York’s prestigious prep schools. “I call it woke-weaning. And that’s the product schools like mine are offering.”
The parents I spoke with for this story are savvy and smart: they realize that it’s bizarre—at best—for a school like Harvard-Westlake to hold forth constantly about social justice as it drops more than $40 million on a new off-campus athletic complex. This is a school that sends out an annual report to every Harvard-Westlake family listing parents’ donations. Last year, the “Heritage Circle” group—gifts of $100,000 or more—included Viveca Paulin-Ferrell and Will Ferrell. A red paw next to Jeanne and Tony Pritzker’s names indicated more than a decade of cumulative giving.
Parents say that it is a school where giving more gets you more. Big donors get invitations to special dinners, and, most importantly, time and attention from the people in charge. Meantime, their children are taught radical-chic politics, which, of course, do not involve anything actually substantively radical, like redistributing the endowment.
“These schools are the privilege of the privilege of the privilege. They say nonstop that they are all about inclusion. But they are by definition exclusive. These schools are for the tippity top of society,” a young mother in Manhattan tells me.
Power in America now comes from speaking woke, a highly complex and ever-evolving language. The Grace Church School in Manhattan, for example, offers a 12-page guide to “inclusive language,” which discourages people from using the word “parents”—“folks” is preferred—or from asking questions like “what religion are you?” (When asked for comment, Rev. Robert M. Pennoyer II, the assistant head of school, replied: “Grace is an Episcopal school. As part of our Episcopal identity, we recognize the dignity and worth common to humanity.” He added that the guide comes “from our desire to promote a sense of belonging for all of our students.”) A Harvard-Westlake English teacher welcomes students back after summer with: “I am a queer white womxn of European descent. I use [ she | her ] pronouns but also feel comfortable using [ they | them ] pronouns.” She attached a “self-care letter” quoting Audre Lorde: “Caring for myself is not self-indulgence, it is self-preservation, and that is an act of political warfare.”
Woe betide the working-class kid who arrives in college and uses Latino instead of “Latinx,” or who stumbles conjugating verbs because a classmate prefers to use the pronouns they/them. Fluency in woke is an effective class marker and key for these princelings to retain status in university and beyond. The parents know this, and so woke is now the lingua franca of the nation’s best prep schools. As one mother in Los Angeles puts it: “This is what all the colleges are doing, so we have to do it. The thinking is: if Harvard does it, it must be good.”
“I am in a cult. Well, that’s not exactly right. It’s that the cult is all around me and I am trying to save kids from becoming members.” He sounds like a Scientology defector, but he is a math teacher at one of the most elite high schools in New York City. He is not politically conservative. “I studied critical theory; I saw Derrida speak when I was in college,” he says, “so when this ideology arrived at our school over the past few years, I recognized the language and I knew what it was. But it was in a mutated form.”
This teacher is talking with me because he is alarmed by the toll this ideology is taking on his students. “I started seeing what was happening to the kids. And that’s what I couldn’t take. They are being educated in resentment and fear. It’s extremely dangerous.”
Three thousand miles away, in Los Angeles, another prep-school teacher says something similar. “It teaches people who have so much to see themselves as victims. They think they are suffering oppression at one of the poshest schools in the country.”
It seems to be working. One Los Angeles mother tells me that her son was recently told by his friend, who is black, that he is “inherently oppressed.” She was incredulous. “This kid is a multimillionaire,” she said. “My son said to his friend: ‘Explain it to me. Why do you feel oppressed? What has anyone done to make you feel less?’ And the friend said: ‘The color of my skin.’ This blew my mind.”
The science program at Fieldston would make any parent swoon. The electives for 11th- and 12th-graders, according to the school’s website, include immunology, astronomy, neuroscience, and pharmacology.
But physics looks different these days. “We don’t call them Newton’s laws anymore,” an upperclassman at the school informs me. “We call them the three fundamental laws of physics. They say we need to ‘decenter whiteness,’ and we need to acknowledge that there’s more than just Newton in physics.”
One of her classmates says that he tries to take “the fact classes, not the identity classes.” But it’s gotten harder to distinguish between the two. “I took U.S. history and I figured when you learn about U.S. history maybe you structure it by time period or what happened under each presidency. We traced different marginalized groups. That was how it was structured. I only heard a handful of the presidents’ names in class.”
Brentwood, a school that costs $45,630 a year, made headlines a few weeks back when it held racially segregated “dialogue and community-building sessions.” But when I speak with a parent of a middle-school student there, they want to talk about their child’s English curriculum. “They replaced all the books with no input or even informing the parents.” The curriculum no longer features classics such as The Scarlet Letter, Little Women, To Kill a Mockingbird, and Lord of the Flies. New books include: Stamped, Dear Martin, Dear Justice, and Yaqui Delgado Wants to Kick Your Ass.
“The dean said to me, basically, it’s important to change with the times,” said the Brentwood parent. In a statement, Brentwood’s director of communications said: “Diversity, equity and inclusion are critical components of our education and our community at Brentwood School. The events of last summer created a call to action for all of us, in our school community and beyond.” Brentwood has announced a late-starting school day on March 10 for the lower school “due to our faculty book study of White Fragility.”
At Fieldston, an elective is offered to high school juniors and seniors called “historicizing whiteness.” At Grace Church School, seniors can take a course called “Allying: Why? Who? and How?” The curriculum includes a ’zine called “Accomplices Not Allies” that declares “the work of an accomplice in anti-colonial struggle is to attack colonial structures & ideas,” alongside a photograph of a burning police car. Harvard-Westlake, in its extensive antiracist plan announced this summer, included “redesigning the 11th grade US History course from a critical race theory perspective,” among many similar goals.
To question any of the curricular changes, parents say, is to make yourself suspect: “Every group chat I’m on with school parents, with the exception of my concerned parents’ group, they have a pattern of shaming anyone who shares anything remotely political or dissents from the group narrative,” one Brentwood mother wrote to me. “Once someone shames one person, many chime in agreement. The times I speak up to defend those they shame, they attempt to shame me.”
In this worldview, complexity itself is a kind of racism, nuance is a phobia, and skepticism merely a type of false consciousness. Ibram Kendi, author of How to Be an Antiracist, plainly spelled out the logic on Twitter recently: “The heartbeat of racism is denial. And too often, the more powerful the racism, the more powerful the denial.”
One teacher told me that he was asked to teach an antiracist curriculum that included a “pyramid” of white supremacy. At the top was genocide. At the bottom was “two sides to every story.”
“‘Two sides to every story,’” he said. “That was on the racist pyramid.”
But the most important consequence of the woke ideology isn’t a lesser English curriculum. It’s that the ideology, which seems to touch every aspect of schooling now, has changed children’s self-conception.
Consider this story, from Chapin, the tony all-girls school on the Upper East Side, involving a white girl in the lower grades who came home one day and told her father: “All people with lighter skin don’t like people with darker skin and are mean to them.” He was horrified as she explained that that was what she had been taught by her teachers. “I said to her: that’s not how we feel in this family.” It’s worth taking a look at Chapin’s various affinity groups, which have become de rigueur at all of these schools. (Chapin did not respond to a request for comment.)
For high schoolers, the message is more explicit. A Fieldston student says that students are often told “if you are white and male, you are second in line to speak.” This is considered a normal and necessary redistribution of power.
At Harvard-Westlake, the school recently administered the debunked implicit-bias test to tenth-graders. It was technically optional, but several parents I spoke with said that their children felt compelled to take it. One mother confided that her son said to her, “Mom, I just found out I’m a racist and I prefer White Europeans.” Her child is mixed race. “For my kid to come home and be told by his school you are a racist—I was aghast. I was so, so angry.”
A Brentwood parent says that she has tried, in small ways, to stand up to this. “They say I don’t understand because my skin is white.” Children like hers are being taught to give up ambition and yield positions that they might earn through hard work to others who are more marginalized. “My child is asking me obvious questions like: If I work really hard, shouldn’t I get rewarded?”
All of this “has made me think about race more,” said one teen boy in Manhattan. The curriculum, he explained, was trying to teach him to feel obsessed with his whiteness, the opposite of what his parents had taught him to do. Making students separate out by race in affinity groups is racist, he said. “MLK would condemn my school.”
Some students are rebelling, which, in this case, looks like becoming a Republican. But others go all-in on the ideology, which has created conflicts with parents who don’t. “The school has taken over as the moral guide, with me being the irritating person in the background who doesn’t really get it,” says one Harvard-Westlake mother.
So children learn how the new rules of woke work. The idea of lying in order to please a teacher seems like a phenomenon from the Soviet Union. But the high schoolers I spoke with said that they do versions of this, including parroting views they don’t believe in assignments so that their grades don’t suffer.
No reliable survey data exist on free expression among high schoolers, but last week, Heterodox Academy published its annual Campus Expression Survey Report, which found that, in 2020, 62 percent of college students surveyed “agreed the climate on their campus prevents students from saying things they believe.”
Relying on word of mouth, parents are trying to suss out which, if any, of the private schools in their city avoid this ideology. They ask me what I know. “I don’t know where to move him to. I yank him and it’s the same thing. But I have a pit in my stomach about sending him back for third grade,” says a mother at Riverdale Country Day School in the Bronx, in a concern echoed by many parents. (Riverdale declined to comment.)
When I began working on this story, I didn’t feel that much sympathy for these parents. Some 18 million public school children have not set foot in a school in the past year. A study released in early December by McKinsey and Co. found that virtual learning hurt all students, but students of color the most: remote school set them back by three to five months in math, for example. Such numbers do not begin to capture the crippling effects, including suicidal ideation, that this past year has had on what experts are already calling a lost generation.
The parents in this story are not parents with no other options. Most have the capital—social and literal—to pull their kids out and hire private tutors. That they weren’t speaking out seemed to me cowardly, or worse.
The cynical answer for their silence is two words: Ivy League. “There are definitively rumors that the school has like, say, three picks for Duke and that if you stand up against this your kid will get blackballed,” says one mother.
Another explanation is groupthink and social pressure. “Sometimes the smartest people are the easiest ones to fool,” says a father who recently moved his son from one school to another that he judges to be marginally better. “If you made a decision to go on the board of Dalton having espoused all these leftist views forever and you want your kid to get into Harvard, you are not going to stand up and say, ‘wait a second, guys.’ You’re just not going to do it. Most people want to be members of the club.”
I think it’s true that many people would rather violate their stated principles than be iced out of their social network. But this is a situation that goes beyond getting shunted to a bad table at the Robin Hood gala. To resist this ideology is to go against the entire institutional world.
It’s not just Dalton, a school that has committed to being “visibly, vocally and structurally antiracist.” Bain & Company is tweeting about “Womxn’s History Month.” The Cartoon Network is imploring children to “see color.” Coca-Cola employees were recently instructed to “be less white.” You cannot buy or sell the newly problematic Dr. Seuss titles on eBay. This ideology isn’t speaking truth to power. It is the power.
Most alarmingly, the ideology is increasingly prevalent at the local public school. The incoming New York City schools chancellor is a vocal proponent of critical race theory. In Burbank, the school district just told middle- and high school teachers to stop teaching To Kill a Mockingbird and Of Mice and Men. The Sacramento school district is promoting racial segregation by way of “racial affinity groups,” where students can “cultivate racial solidarity and compassion and support each other in sitting with the discomfort, confusion, and numbness that often accompany white racial awakening.” The San Diego school district recently held a training in which white teachers were told that they “spirit murder” black children.
“I don’t mean to get emotional, I just feel helpless,” said one mother through tears. “I look at the public school and I am equally mortified. I can’t believe what they are doing to everybody. I’m too afraid. I’m too afraid to speak too loudly. I feel cowardly. I just make little waves.” Another tells me: “It’s fear of retribution. Would it cause our daughter to be ostracized? Would it cause people to ostracize us? It already has.”
I have a friend in New York who is the mother to a four-year-old. She seems exactly the kind of parent these schools would want to attract: a successful entrepreneur, a feminist, and a diehard Manhattanite. She’d dreamed of sending her daughter to a school like Dalton. One day at home, in the midst of the application process, she was drawing with her daughter, who said offhandedly: “I need to draw in my own skin color.” Skin color, she told her mother, is “really important.” She said that’s what she learned in school.
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What exactly are we afraid of? It was always a safe bet that there would be an inflation scare at some point early this year. Just the base effects caused by the shutdown and the dive in the crude oil price 12 months ago more or less guaranteed that year-on-year comparisons would look scary for a while. But the scare has already started, at a point when actual figures don't look alarming in the slightest. This is Wednesday's reading for core U.S. consumer prices (excluding fuel and food). It was slightly lower than expectations:
As for the official market view, five-year breakevens have moved up to 2.5%. As the Federal Reserve wants inflation to run above 2% for an extended period, this is outright good news. Meanwhile five-year five-year forward breakevens suggest that the market is expecting prices to cool in the years from 2016, and average almost exactly 2%. That suggests positive reflation over the next few years, but not a return to a true inflationary regime and psychology:
Meanwhile, real yields remain negative. After a sharp rise in February, enough to have an effect on other markets, the U.S. 10-year real yield has declined again. Its trend still appears to be upward, but it is hard to call this a serious tightening of financial conditions:
If central banks do anything about this, it will be to try to put a thumb on the scale to push bond yields down again. Thursday's meeting of the European Central Bank has been preceded by much speculation about what actions the ECB might take, even though 10-year German bund yields remain firmly negative in both nominal and real terms.
So where does the alarm come from? And where would inflation itself come from? The longer-term arguments rest on demographics, and in a historic shift in the Fed's priorities, to match the change in population trends and central bank priorities that ushered in the age of declining inflation 40 years ago. For long Points of Return discussions on these topics, see here and here. These arguments have to contend with the fact that improving technology has acted as a deflationary force for decades, and will probably continue to do so.
These ideas are swirling around the investment world. But what has really driven the stock market rotation in recent weeks isn't a fear of inflation so much as a swift rise in bond yields. In the short term, this might engineer a selloff — but that is due to the mathematics of leveraged investing, rather than the discount rates for future cash flows.
Tom Tzitzouris of Strategas Research Partners suggests that stocks have avoided an overall selloff because yields have barely touched what he describes as the "danger zone." He defines this using a "fair value" metric for yields which I covered earlier this year. On this definition, fair value is the expected cost of carry, which should generally be close to the consensus expectation of the neutral fed funds rate over 10 years. Tzitzouris's model posits that a danger zone is reached when the the actual yield exceeds this fair value by 15 basis points or more. And the market has shown a remarkable ability to flirt with that zone so far this year without going significantly far above it:
Compare and contrast with the infamous "taper tantrum" of 2013, when bond yields shot up in response to a shift in messaging from the Fed's Ben Bernanke. On that occasion, yields spent the better part of two months in Tzitzouris's danger zone. This led to an initial fall in U.S. stocks, and then to severe problems for a range of emerging markets:
Why does it work that way? Tzitzouris suggests it is because of the wide use of leverage. For leveraged investors using popular models based on value at risk, it needn't take a rise of more than 20 or 25 basis points to force them to close a position — which means selling stocks. That is what happens if the rise happens quickly. If the rise happens slowly, and remains below the danger zone, they can take evasive action by rotating toward stocks with cheaper valuations, rather than bailing out of equities altogether. The speed of the increase matters. So far, the rise in bond yields has been enough to force a big rotation within stocks, but not one at the level of asset classes, from equities back to bonds,
Thinking through the intuition further, if a rise in bond yields is due to higher growth expectations (which is the case this time), and those expectations also raise expectations for future earnings, higher rates can be dealt with, at least in the models that investors use. When rates rise due to a change of philosophy by the Fed (as in the taper tantrum), or due to an attack by bond vigilantes, then this is much more damaging to the stock market.
So far, this increase in bond yields hasn't been anything like 2013. This chart compares real 10-year yields then and now.
It is a fair guess that if real yields were continuing to move upward in a straight line, as they did in spring 2013, stocks would be staging quite a selloff. But they aren't. The latest inflation numbers helped stall the rise in bond yields for another day. The stock market's response was intriguing. After two days of dramatic switchbacks, the rotation out of growth and toward value continued, with tech companies falling again — and the average stock, as expressed by the S&P 500 equal-weighted index, hit an all-time high. So far this year, stocks have had a charmed existence, and bond investors have held back from engineering the kind of rise in yields that would force equity investors to the exit.
The market excitement of the year has been a "yields scare" rather than an "inflation scare." For the short term, the great alarm was the possibility of a repeat of the bond selloff of 2013, and that has been — just about — avoided. For the longer term, inflation is much scarier. But it could be a while before we can discern the outlines of whether we truly have a secular shift toward higher inflation. In the meantime, it looks like stock investors will continue to ride their luck.
Covid-19: The Race Against Time
The news on the pandemic is almost, but not quite, uniformly good. The vaccine rollout is getting going in earnest, and now appears to be exerting a downward push on the spread of the disease. On all measures followed by the Covid Tracking Project, the pandemic appears to be coming under control in the U.S.:
Further, the ability to keep people out of hospital is radically improved. Near to home, New York City suffered a terrible outbreak a year ago. The number of confirmed cases over the last few months actually topped the cases at the worst of the first wave. But this is what has happened to the number of hospitalizations:
Whatever the varying efficacy of the different vaccines, they are all almost equally good at keeping people from getting so ill that they need to go to hospital. There is, however, one area of concern to which all should be looking. Continental Europe, it is widely known, hasn't done a great job of distributing the vaccine so far. The contrast with the EU's recently departed member the U.K. might almost be funny if the consequences weren't potentially tragic (the chart comes from NatWest Markets):
If we include more countries, the EU looks worse, but the world's two most populous countries, China and India, look even more alarming:
This matters for two reasons. First, the longer a country waits until it has reached effective "herd immunity" — where the progress of the virus is stopped because it cannot find new bodies prone to infection — the longer it also has to wait until it can return to economic normality. Time taken over vaccines directly translates into lower GDP for this year. In many countries, as this chart from Bank of New York Mellon Corp. shows, restrictions on economic activity are almost as stringent as at the peak of the first wave:
A second reason for speed concerns the math of herd immunity. We don't yet know exactly how long immunity lasts, whether conferred by vaccine of suffering an infection. We will learn more about this in the next few months, but if immunity only lasts six months, then time is of the essence. Daniel Tenengauzer of Bank of New York Mellon Corp. offers the following arithmetic:
Assuming a six-month immunity window, a pace of delivering one shot to 0.33% of the population each day would achieve 60% immunity after six months (0.33 * 182 = 60%). The range of vaccination pace would be as follows: 0.27% of the population getting one shot daily to reach 50% immunity within six months, or 0.41% of the population vaccinated daily to reach 75% immunity also within six months. The current vaccination pace stands at 1.1% of the population receiving daily vaccines in Israel and 0.68% in the UAE. For the U.K. it is also quite robust at 0.58% as it is in the U.S. at 0.54%. Additional countries at rates above 0.33% are Morocco, Chile and Turkey. In the Eurozone the pace remains sluggish, at 0.2% in Spain, 0.17% in Germany and 0.18% in France. Italy is even lower at 0.17%. Canada is at 0.15%.
If herd immunity isn't achieved before early vaccine recipients begin to lose their immunity, then the chance to halt the virus in its tracks is lost. And there is no cause for complacency, because there are signs of another wave of the disease forming in Europe. The trend in cases is firmly downward for most of the continent, but this is the regional breakdown of new cases in Italy since last summer, as charted by NatWest using Johns Hopkins data:
We know the drill by now. These are cases, rather than deaths or hospitalizations. But the fact remains that cases are a leading indicator, and are plainly heading in the wrong direction, even as winter gives way to spring. Central Europe, which largely avoided the first wave last spring, gives greater cause for concern. Poland appears to be in the grip of a second wave:
Similar trends are also at work in Austria. Meanwhile the Czech Republic is suffering its third wave. Twice, promising attempts to snuff out the disease have come up short:
The odds that the pandemic will soon be relegated to the status of a mere irritant still look very good. But Covid-19 is adapting into new variants, and downside risks (financespeak for the possibility that many more people will die) remain. The financial good news is that there is still some upside ahead if the disease can be squelched in continental Europe in the next few months. The bad news is that we still need to keep a very close eye on the progress of cases and hospitalizations in Europe, and on the progress of the EU (and of the large emerging markets) in getting vaccines into arms.
Survival Tips
On this subject, I urge all readers to get vaccinated if they possibly can. Today, I was lucky enough to have my second shot of Pfizer Inc. vaccine. Twelve hours later, at the time of writing, it's a little painful to lift my left arm much above the level of the shoulder, but other than that it's not the horrific ordeal that many are suggesting. Encouragingly, the process in New York was far more orderly, smooth and efficient than when I went in for my first shot three weeks ago.
Going through the process reveals all the ways that this has been a baffling logistical puzzle. The banality of the final experience, with a brief and transitory pain as a tiny amount of liquid enters your muscle, can only leave you baffled with wonderment at the human ingenuity that brought us to this point.
The end is in sight. The first few weeks of the vaccine rollout were punctuated by the same kind of anger and recriminations that we saw over hoarding at the beginning of the lockdown a year ago, amid allegations about queue-jumping and wasted shots. Now, judging by the atmosphere in New York, it's become more of a determined community effort to get rid of this thing and get our lives back. Any vaccine in the arm of any adult brings it closer. I doubt many Points of Return readers suffer from serious "vaccine hesitancy," but in case you are: Just do it.
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