Please find this week’s edition of Weekly Digest attached.
The US Federal Reserve and Bank of England policy decision meetings both left policies unchanged as expected. The most resounding signal, in the first meeting after the Jackson Hole policy pivot (to allow the economy to “run hot” for a period to compensate for any shortfalls) was that the Fed Funds Rate is expected to remain at zero for a long period – the Fed Funds Rate is expected to remain at zero through to 2023. Chair Powell hammered home the importance of this “powerful” update as a concrete manifestation of the new policy framework, at the press conference.
US weekly jobless data were consistent with some slowing of the economic recovery. Last week initial unemployment claims fell slightly to 860,000 for September, but remained at a historically-elevated level.
The US election odds remain close:
I have not highlighted before that every Wednesday our excellent pharmaceutical analyst, Dr Jimmy Muchechetere hosts an internal COVID “surgery”, which has been of great help this year. I thought it might be useful this week, with the current UK headlines, to share some of his notes from last week’s session, even if I do not generally like to highlight quite UK-specific points as we manage global portfolios for you/your clients.
If the UK is testing more than all other EU countries, why is it struggling to offer tests?
– Out of the 375k lab testing capacity, about 1/3 are antibody tests which are not for acute use. Subtracting that from the mix leaves ~250k tests
– In order to avoid the mistakes of the first wave, namely not protecting care homes, 100k tests have been reserved for the care home sector. This leaves ~150k for everyone else aka community testing
– But this community testing lab capacity was built from scratch in April and May staffed by temporary workers mostly university students and volunteers. Many of these people have gone back to university or previous vocations
– This was the experience in Scotland which opened schools and universities earlier but like the A-level and GCSE grades experience, England did not take any lessons
If the logjam is at labs, why can I not get an appointment at the test centre?
– There is no shortage of test kits, testing personnel or any frontline services
– The government is rationing appointments to buy time for lab to clear a backlog
– There is a narrow window for test kits used to be processed and so to avoid waste, tests are not being made available if they can then not be processed in labs
– The bottleneck is lack of personnel at the labs: test swabs need to be unpacked and loaded into machines and taken out again – not high tech skills but still need to be done
Can the government hit the 500k target by end of October?
– There is a high probability it will get close
– Two new labs being built up and will have a significant impact on capacity
– Need to hire and train staff and perhaps give them proper contracts
– Cost will be an issue as the average cost of a test is ~£100 or £50m per day
Will Russia and China get back to normal ahead of the rest of the world?
– Launching vaccines at risk is taking a calculated chance that they will work and build herd immunity
– Russia and China have leapfrogged the rest of the western world which still is on a timeline of mid-2021 for a widely available vaccine and herd immunity perhaps this time next year; the former will be ~6 months ahead
– But there is a non-negligible risk that the vaccines do not work
How much of a risk is Boris’ moonshot?
– The most credible technology now is a saliva test. One has been approved in China with a turnaround time of ~20mins
– Some other emerging technologies rely on artificial intelligence. This is not futuristic stuff, these technologies are already used in screening cancers used past data built into an computer algorithm
– The tests do not have to be very sensitive (few false negatives) if prevalence is low. Low specificity (many false positives) are only a problem if prevalence is low as too many people unnecessarily taken out of action
– In essence these could be used as screening tools and if there is doubt then that small fraction can then have the gold standard swab test
– But it does not solve the question of infectiousness
– Perhaps the weakness of Boris’ idea is announcing it before technology is proven i.e. a ‘communications’ problem not a scientific one
For context, one of Jimmy’s latest slides: