I came across a Bloomberg piece making a case for vaccine euphorias being overdone. The heart of the thinking was as follows:
- Traders are not immunologists and have not driven down into the detail. Initial results show that protection is achieved 7 days after the second dose, which must come three weeks after the first dose. The whole process takes 28 days. So in order to be effectively vaccinated by year end you need to start the process by December 03.
- A 90% base effectiveness rate is a good sign for other vaccines which suggests there may be a range of other options in the first half of 2021
- The vaccine needs to be stored and transported at -70C which makes for logistical challenges. Pfizer hopes to apply to the FDA to start distributing later in November and has around 50 million doses prepared this year (enough to treat 25 million). This means that the best case scenario is for 25 million people vaccinated by year end.
- Now consider that 3.9 million people got the virus last week. So that means that if you assume this number of people get the virus each week it will mean that by year end there will be 29 million new cases, but only 25 million vaccinated. A net growth of 4 million cases.
All of the above points mean that the vaccine process will take time and that a correction lower in US stocks would make sense heading into year end.