Grey Swans are those low-probability, high-impact events that few expect, and 2021 has felt full of them. We therefore continue our tradition of picking Grey Swans for the upcoming year. If you’re new to this tradition of ours, then please click here to learn more.
Covid-19 has subsumed many of our traditional social pleasures, customs, habits and lifestyles. Arguably, it has also created a more unequal and divided society. Over the last two years, government-mandated restrictions have touched billions of lives, and still the pandemic has claimed more deaths than all but five other pandemics in history. Yet the nature of viruses, natural immunity, treatments and vaccines could mean 2022 is the year the pandemic ends.
Start with variants. Covid-19 has been uncharacteristically slow to mutate, but the latest concerning variant, Omicron, has 32 mutations in the spike protein – many more than past strains. Omicron could be the start of a new batch of variants vastly different from the one first identified in Wuhan. As the virus finds more ways to live inside us, it may also want to keep us alive. Take the 1918 Spanish flu for example. A mutation was probably why the pandemic ended after two years.
Next, natural immunity is growing. In the UK, around 15% of the population have antibodies from infection. And the risk of developing severe disease from reinfection is just 1% of the risk of a previously uninfected person getting severe disease. So, analogous to the immunity that develops against other seasonal ‘common-cold’ coronaviruses, long-term natural immunity to Covid-19 could stop us from realising we even have it!
A third, potentially complementary cause for the demise in Covid-19 is vaccines. Even with the new Omicron variant, Moderna CME Paul Burton said a new shot could be reformulated by the beginning of 2022. This agility is characteristic of mRNA vaccines, like Moderna and Pfizer. It is the first time mRNA vaccines have been deployed, and their ability to be quickly altered and administered as boosters should significantly reduce transmission. Also, an estimated 1.7bn doses are due to be donated and administered through COVAX to the rest of the world from 2022.
Lastly, any new variant could just disappear! Omicron, for example, developed in the warmer climate of South Africa. Alongside its many mutations, that could make it very unstable. Such disappearing acts have happened before, an example being Covid-19’s close relative – Sars.
If the SARS-CoV-2 pandemic ends in 2022, what can we look forward to? One important change will be the return of in-person teaching without severe disruption. Maths pupils, and I presume others, have reportedly struggled with distance learning. Other population groups have also suffered during the pandemic, especially low-income households. Another consequence of the pandemic we would all like to see go is long wait times on deliveries and hospital appointments!
Yet we will want to keep some things. For many, working from home will outlast the pandemic, although maybe not for those in financial markets. The pandemic has also accelerated digital trends, such as shopping online and cashless payments. We can also hope the return to public transport and the convenience of online meetings will reduce CO2 emissions. As for greetings, it appears a wave or a nod will be the way to go post-pandemic!
Fingers crossed for 2022!
Sam van de Schootbrugge is a Macro Research Analyst at Macro Hive, currently completing his PhD in international finance. He has a master’s degree in economic research from the University of Cambridge and has worked in research roles for over 3 years in both the public and private sector.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)