When SocGen’s Albert Edwards delivers a “trigger warning” (underlined, with an exclamation point in the original), it’s only natural to get a bit nervous.
After all, Albert’s musings are scary enough when they’re not presaged by the modern equivalent of those “parental advisory” stickers that once featured prominently in the bottom right-hand corner of albums with explicit lyrics. (A quick scroll through the Apple Music app pre-installed on my phone indicates those labels are still there, but I fail to see the utility. There was a time, believe it or not, when you actually needed a parent to be physically present at the record shop to purchase an album with the label if you were under 18.)
I breathed a sign of relief, though, when Edwards indicated that he intended to discuss COVID vaccination trends. “I know from Twitter that discussions about COVID can get very heated as people have strong views,” he said, adding that “If you don’t want to be ‘triggered’ by my thoughts on this topic, do feel free to stop reading now!”
Albert might be the only analyst on the planet whose thoughts on COVID are less controversial than his thoughts on markets. Given the sheer grandiosity of the predictions he’s made over the years about impending economic armageddon, there was virtually no chance he was going to say anything about the coronavirus with the potential to surprise or otherwise offend his multitudinous (and multifarious) fan base. Once you’ve implicitly (and, in many cases, explicitly) predicted an economic collapse capable of setting humanity back several hundred (if not several thousand) years, you’re unlikely to shock anybody by suggesting the evolution of virus curves might be more unfavorable than optimists believe.
Edwards began by setting the scene:
As usual for this time of year I am in Banyuls-sur-Mer, a small seaside town on the most southeastern tip of France just on the Spanish Border (between Perpignan in France and Barcelona in Spain). We certainly have jumped from the UK frying pan into the Pyrénées-Orientales fire as the high infection rate spills across the Spanish border.
So, if you’re playing “Where’s Wally?,” you can spot Albert’s striped shirt in the south of France.
He proceeded to underscore concerns voiced by some of my own readers over the past couple of days. Namely, that extrapolating the divergence between UK virus cases and UK hospitalizations and deaths, to other countries could be misguided.
The UK lifted restrictions this week despite the rapidly proliferating Delta variant. It’s a “We’ll see how it goes,” kinda situation.
After suggesting that the US, Spain and France are likely to be in the same boat as the UK in terms of rising infection rates in fairly short order (he cited Our World in Data), Albert gently suggested that “it may be overoptimistic of markets to assume the US or the EU may have as loose a link between infections and hospitalizations/deaths as does the UK.”
Put differently, Edwards said “the read-across from the UK to elsewhere is not that simple.”
Why? Well, for a couple of reasons, potentially. I would note that despite the “trigger warning,” Albert didn’t really lean on any controversial arguments. He cited data from the CDC. I accessed it and dropped into Excel. The simple figure (below) illustrates one of his points.
After noting vaccine hesitancy in the US (a well-known, well-documented phenomenon), Albert wrote the following (and I’m going to break with tradition and use a block quote from someone other than myself, because when it comes to the vaccination debate, failing to delineate who said what or, worse, misquoting someone, is perilous):
It is the much lower level of take-up of vaccinations in the older populations both in France and the US that really surprises me. In the US it’s not so much the over-65s that passed on vaccination – 91% have had one jab, not dissimilar to the UK high rates. Rather what surprises me is that only 66% of Americans in the 50-64 age group are fully vaccinated. And although that is exactly the same rate as in France, at least in France the rate is still rising.
The main problem in terms of hospitalizations and deaths is the extent to which the older, more vulnerable population have been vaccinated – and on that score the US does not fare well. On this view it would be reasonable to conclude that it may be complacent to read the UK’s loosened link between infection and hospitalization across to other countries with much lower vaccination rates, particularly of the elderly. The US clearly has a far lower vaccination rate, especially among that 50-64 age group and this unvaccinated cohort might well prove fertile ground for severe infection by the Delta variant.
For reference, the NHS noted Thursday that “nine in 10 individuals aged 50 and over (19,752,855, 93.9%)… have been vaccinated with both doses.”
The breakdown from the NHS’s most recent weekly vaccination statistics appears to show that — and forgive me for lapsing into colloquialisms here — damn near everyone in England between 55 and 64 has had at least one dose (figure below).
Across the three relevant age buckets listed by the NHS (50-54, 55-59 and 60-64) only the “have had second dose” figure for the 50-54 bucket is below 90% — and just by a couple of percentage points.
You can, and should, draw your own conclusions from the above. The point, as it relates to markets, the economy and the macro, is simple enough. As Edwards wrote, “renewed lockdown[s] might be a realistic prospect in the US and parts of Europe in a way that it might not be in the UK.”
[Editor’s note: I’ve provided links and sources for all of the data above. If you see any errors at all, please feel free to point them out or drop me an email. The data is presented directly from the CDC and NHS.]