I took the Friday after Thanksgiving off. It’s usually a low volume day in markets and a sleepy day around the office. More importantly, my son Ethan was picked as an honorary ball boy at the Purdue basketball game against Omaha. He got to meet the team, got shown on the jumbo-tron at half-time, and was allowed to shoot around before the game. It was a great day, made only better by the absolute thumping Purdue put on Omaha. This could be our year.
Unfortunately, in the background occupying some of my attention until mid-day was the news about a new COVID variant, called omicron, that had emerged initially in southern Africa and has now been found in several nations on different continents, including North America. You’ve probably heard by now; the variant is highly mutated and appears specifically adapted to spread rapidly.
The news and the name, omicron, is scary. Financial markets reacted violently to the downside. Governments around the world reacted reflexively, shutting down travel. It felt like COVID Groundhog Day, and I believe the emergence of omicron marks the start of the next stage of the pandemic. The endemic stage.
Like so many of us, I’ve spent the last almost two years obsessing about COVID-19. I’ve read everything I can get my hands on. I’ve learned how to access and read clinical trials and FDA approval documents. I’ve learned how to access and read data on vaccine reactions, and at this point I actually have my “favorite” COVID dashboards. I’m still not a virologist, but I’ve listened to and read every point of view, and soaked it all up with an open mind.
I’ve also read about past viral outbreaks and pandemics, and quite frankly fictional outbreaks and pandemics. Due to the nature of contemporary government, the advances in medical science, and the modern development of information aggregation and dissemination, the COVID pandemic is clearly unique in human history. But human behavior is fairly consistent. Collectively, we still tend to operate in predictable cycles.
I think in the next stage of the pandemic we will need to start having more candid public health conversations about the efficacy of vaccines in ending the pandemic. At this time last year, I remember anxiously awaiting the release of the vaccines being rapidly developed. When I got my jabs in early 2021, I was sure it was the beginning of the end. The mRNA vaccine technology seemed like “next-gen” technology, a miracle of modern medical science.
As an investor, however, I have been looking at other people’s numbers for my whole career. And while I won’t profess to catch it every time, I have gotten pretty good at crying foul when something doesn’t look right in an earnings release or financial statement. When I see that new case numbers for the pre-vaccine period of Nov. 1, 2020 (82,000) don’t deviate much from the new case numbers for Nov. 1 this year (73,000), when 69% of adults and 86% of those over 65 are fully vaccinated in the United States, I have to take pause (source: CDC.gov).
Going deeper into the data, on Nov. 1, 2020, 46,000 patients were hospitalized with COVID in the U.S., and on Nov. 1, 2021 the number was 42,000 (source: OurWorldinData.org). Slice and dice the data all you want, there are not enough unvaccinated people left to completely account for all these trends. Math is math, the pandemic continues, and now we have omicron.
Financial markets greeted omicron with sinking stock market indexes (S&P 500 down 1.8%) and falling bond yields (source: Bloomberg). With governments in other western nations moving to COVID lockdowns, in my opinion investors are trying to evaluate this possibility in the U.S. At this point I think beyond a handful of urban centers, this potential remains unlikely here, but I’ve learned not to be surprised by anything COVID anymore.
As we collectively move toward learning how to live with COVID (endemic), while giving up on the probability we will one day live without it, there will doubtless be some scary bumps in the road. Markets are likely to become sensitive to this process over the winter months as governments face evolving data and opinions on the pandemic. The good news is vaccines provide an effective tool for individuals in addressing and managing their personal COVID risk, and effective therapeutics continue to develop rapidly. While there may be darkness ahead, in my opinion there is light on the horizon.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at marc.ruiz@oakpartners.com. Securities offered through LPL Financial, member FINRA/SIPC.