Admitting you're clueless about Covid-19 is healthy

Nick Hubble | 1 May 2020 Covid-19 isn't finished with the stockmarket yet  Dear Reader,   As the grandson of an NHS nurse who refused to take the thalidomide she was told to, you might say I'm existentially predisposed to be a medical sceptic.   The first real success story of the publishing company behind Exponential Investor was publishing what became known as the Atkins diet. This was back when Doctor Atkins was described as a danger to society and the American Medical Association was trying to take away his medical licence.   You can imagine I fit right in, in all sorts of ways. And, at the risk of being fantastically offensive to you all, I'd like to cover how the government's narratives on Covid-19 are breaking down. Because that's going to become important when we take stock of the economic impacts.   No doubt you've seen the official forecasts of a depression plastered on the papers recently. Well, what if it was all unnecessary? A big mistake?   What if our understanding of Covid-19 is so poor that we're doing more harm than good with our lockdown response?   Surely we can't get it quite that wrong?   Well, I think there's a good chance that the global response to Covid-19 will prove the true debacle when we look back. And the first signs we've got it dreadfully wrong are already emerging. Today, I'd like to review a few of them…   The Financial Times revealed that the government's guidelines on the ventilators it needs for Covid-19 patients are… disappointing. Alison Pittard, the dean of the Faculty of Intensive Care Medicine, the professional body for intensive care practitioners, put it like this:   If we had been told that that was the case — that the ventilators were only to treat a patient for a few hours — we'd have said: 'Don't bother, you're wasting your time. That's of no use whatsoever'.   Not that the right sort of ventilators are necessarily doing good anyway. The Germans have grown especially sceptical about using them. Medical news site StatNews put it like this:   Even as hospitals and governors raise the alarm about a shortage of ventilators, some critical care physicians are questioning the widespread use of the breathing machines for Covid-19 patients, saying that large numbers of patients could instead be treated with less intensive respiratory support.   If the iconoclasts are right, putting coronavirus patients on ventilators could be of little benefit to many and even harmful to some.   Harmful? The mystery of missing oxygen in Covid-19 patients is widening. But that doesn't stop doctors from acting, even if it harms some of their patients.   But at least we have lots of capacity, right?   The Telegraph is reporting that "intensive care capacity at existing London hospitals never went above 80 per cent".   No wonder NHS staff are busy posting videos of themselves dancing in the PPE gear there's a shortage of.   Everyone's favourite punching bag Sweden, meanwhile, is doing rather well given the apocalyptic predictions its lack of lockdown earned it. By most measures it's middle of the pack for European nations, once you adjust for population size and timing. German papers are complaining that the Swedes didn't have to go through a lockdown, but the infection rates are falling there too.   And inside Germany, where the lockdown was comparatively lax for the economy, which none of the same people who criticised Sweden criticised the Germans for, is also doing better economically. Sven Jari Stehn, an economist at Goldman Sachs, pointed out how Covid-19 would hit economies differently: "We expect the unemployment rate to rise to 23% in Spain and 17% in Italy, but only see a limited increase in Germany (to slightly above 5%) and France (about 10%)." That'll do wonders for EU harmony…   The debate over whether a lockdown is the right thing to do is a complete shemozzle because it doesn't adjust for timing easily. A lockdown works if it is implemented when the outbreak is still very small, or hasn't happened yet. In nations which went into lockdowns late, it hasn't worked, comparatively speaking. Which means it may have been unnecessary.   But even those assumptions are now in doubt. In a study on Lombardy by Daniil Gorbatenko, "The data clearly suggest that the spread had been trending down significantly even before the initial lockdown. They invalidate the fundamental assumption of the Covid-19 epidemiological models and with it, probably also the rationale for the harshest measures of suppression."   Oops.   You may be interested in Q. is this legal?    Quick question:   Is it legal for the government to convert some or all of your savings to bank shares? Answer here. (You won't like it.)       As with most government policies, the problem was well on its way to being solved and then the government crashes in with a sweeping solution which makes the problem worse or creates an alternative problem. An economic crisis is added to the health crisis.      The trouble for those nations which managed to pull off a lockdown is… well just look at what's happening in those nations. Second waves and secondary outbreaks are causing serious problems for their economies now. If you avoided Covid-19, it's still waiting for you.    How long will those who didn't get Covid-19 live in fear? I won't be returning to the office for long after the lockdown ends.    What about the mantra about testing? It was the most important part of the response, right?   Well, I've been sceptical of this from the beginning. Now a series of articles have explained how it all went wrong.   It turns out that some people get multiple tests, so the total number of tests nowhere near equals the total number of people tested.   The rate of false positives and negatives is very high on a lot of testing, releasing Covid-19 sufferers into society or putting people in lockdown unnecessarily. Seriously deficient testing devices have turned up too.   All sorts of figures from testing which are getting compared between nations are not recorded in the same way. This makes a mess of the analysis. The analysis that drives decision-making in governments.   The lack of comparability is obvious when you look at the headlines. Consider this from Bloomberg's homepage recently:   But enough pointing of fingers and throwing bricks. Let's look to the future.   With all eyes now on a vaccine, the world is in for a surprise there too. Because Covid-19 has such a low death rate, the vaccine for it would have to be incredibly safe with minimal risks. And proving that level of safety will take a long time.   For a few years now, mutant strains of polio vaccines have caused more cases than polio itself. Not ideal… I'm worried enough about the vaccines my daughter will get tomorrow, let alone new Covid-19 ones.   At this point, we don't even know if Covid-19 is airborne or not! The World Health Organisation is still deciding which evidence to believe.   Why am I wildly shooting holes in what the world claims to know about Covid-19?   If you believe that financial markets reflect Covid-19's spread, then you shouldn't believe this crisis is over yet. We know surprisingly little and can claim to know less than ever now that our assumptions are falling apart.    Covid-19 isn't finished with the stockmarket, yet. That's why I think you should escape with some of your money.    But where? Well, don't leave it in the banking system. I explain why here. And I've collated six opportunities outside the financial system for you to buy into instead here.    Before you go consider this. Breitbart is reporting on rumours and videos from China that hopeless cases were body-bagged and incinerated alive to free up hospital beds. So, if you're counting your losses in pounds, consider yourself lucky…     Nick Hubble Editor, Southbank Investment Research

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