Blain’s Morning Porridge – March 16 2021: Vaccine Cold Wars
“How long could we allow this beast to gorge and guzzle, feed and feast..”
This morning – Why is Europe suspending the AstraZeneca Vaccine? What’s the real story? And; The trick to investing in disruptive tech is to spot the solution to a need, rather than an answer looking for a question.
We’ve an interesting day’s play here in prospect in global financial markets….
This morning the French, Germans and Italians have announced a coordinated suspension of the Oxford developed AstraZeneca vaccine. The effect will be to further diminish confidence in the AZ jab and the vaccination programme as a whole across Europe. It will have market implications. Without an effective vaccine programme in Europe – forget European holidays and the recovery play in names like TUI, Ryan Air and Sleazy Jet. They will all likely be back under the cosh.
European nations are progressively acting to delay the AstraZeneca vaccine, further delaying the already flawed rollout. You have to wonder what is going on. What is it the European Union leadership knows that medical experts around the globe don’t?
The Europeans say they are very concerned about the number of Thrombosis events around people given the Oxford developed jab. That number is around 40 events of either deep vein thrombosis or pulmonary embolisms in the 17 million people vaccinated with the AstraZeneca vaccine. Not all of these events have been fatal.
There was a French doctor on the radio saying it was clearly dangerous for many patients and this needed to be investigated. The British vaccine expert gamely tried to explain the numbers showed that people given the AZ vaccine were actually suffering fractionally less thrombosis events than would be expected in a normal population. (That makes sense – a major cause of Covid deaths is thrombosis.. if you vaccinate, you reduce thrombosis deaths) He was at a loss to explain why his continental colleagues are stopping it.
The International Society on Thrombosis and Haemostasis (ISTH), clearly said, in a statement, the reported thrombotic events relative to the millions of Covid 19 vaccinations does not suggest a direct link…. Clinical trials did not identify an increased risk of thrombosis.
The ISTH concludes: Based on all available data, the ISTH believes that the benefits of COVID-19 vaccination strongly outweigh any potential complications even for patients with a history of blood clots or for those taking blood thinning medications. The WHO and even the European Medicines Agency both agree with ISTH.
All of which begs the question… why are the Europeans stalling the vaccine rollout?
Answers on a postcard please. Please post them on the website… and we can all chose which we like best.
In a totally unrelated event, the EU will be taking legal action against the UK for daring to extend the grace period for British supermarkets to put in place documentation and permissions for moving goods from one part of the UK to another. The UK set to announce its own plans for a pivot to the Pacific and East this afternoon. It all rather sounds like a monumental playground sulk…
Meanwhile… Disruptive Tech and Adoption
After too many years in financial markets I’ve realised its themes and narratives, rather than the actions of central bankers, or the ebb and flow of interest rates, that dominate the sentiment that drives markets.
I can talk all day about how the Fed distorting interest rates by a few basis points will have enormous consequences on the relative value of stocks versus bonds, or fuel a junk bond feeding frenzy, but all it takes is one clever analyst to proclaim a “disruptive” new concept. That can drive a massive rise in some new stock I’ve never heard of – and suddenly the market is off to the races. Often the disruptive new, new thing is something very old indeed, polished to look new.
For the past year I’ve been watching ARK Invest and its maven founder Cathy Wood hammer home its “disruptive innovation” message. It’s a strategy that caught the zeitgeist and worked right through the extraordinary period we’ve just seen in markets. Even as the pandemic bit and lockdowns put economies and jobs on ice, it attracted billions into its ETF funds, fuelled by the apparently unstoppable rise of disruptive tech. (Of course, it’s helped massively that Cathy’s funds hold all the hot names like Tesla and GreyScale.)
Two factors drove the Tech rally.
The first was cheap money. As central banks pump primed markets to avoid the damage a full-blooded meltdown would do to confidence in recovery, declining bond yields pushed money into better returning, but riskier, stocks. The effect was a massive swing in wealth inequality – the richest 100 billionaires have seen their wealth rise by over $1.9 trillion in the past year! It’s largely been fuelled but the value of their tech stocks. The rich just love QE Infinity and Govt Stimulus.
The second factor was the narrative around disruption and innovation. Think of something exciting – like flying cars. Sure enough; there are companies promising to disrupt conventional transport by soaring over our heads in autonomous drones. Feeling hungry? Don’t head to fridge, pick up your phone and use its’ sophisticated algorithm-ordered tech to order that Pizza the ad you just saw in social media made you think of. Worried about your savings? Don’t buy government bonds which will collapse in value because of the all the money they are borrowing destroying confidence in fiat money – buy this crypto instead because it’s better than gold or money.
Watching Tech is a bit like watching children let loose in a sweetie factory. You know they are going to puke. Or… Which one will be the Augustus Gloop and get sucked up the chocolate pipe? My money is one currently on Ark’s Wood or Softbank’s Son..
Over the past few years I’ve tried to debunk many of the disruption myths. I was right about We-Work, although it took ages for the market to agree its saccharine-sweet-high-tech flavour was just a stodgy property company. I’ve been warning about the dangers of over-estimating Tesla for years, most recently in this article about competition in the EV sector for Finance Monthly.
This morning I came across a new paper from the remarkable Rob Arnott, a chap I’m fortunate to know, on Big Market Delusion – in which he does an in-depth hatchet job on the EV sector. If you are a Tesla fanboy, don’t read it.. it will only hurt. If you are wondering what the real value of Tesla should be, then make sure you do. (If you want a swift summation of Rob Arnott’s note, then John Authers’ daily on BBerg covers it succinctly.)
I could write a very thick book about all the nonsense I’ve read about new tech in the last few years. All the stories about how tech is absolutely going to change our lives..
However, I come not to bury Tech but to praise it…
Tech does work…. When it’s adopted!
The trick is working out early.. what is likely to work, and what isn’t. The reason Apple is such a fundamentally strong company is because it designs, produces and sells an enormous number of very good products that dominate its chosen market. As a Applephile I am wearing the watch, typing onto a iMac, with an iPhone on the desk, an MacPro in my schoolbag, etc. That is not disruptive innovation – that is adoption.
We are now into a new phase in tech. We see adoption all around us. One fund I am invested in is Shard Capital’s Sure Valley Ventures – which funds software-based businesses. It’s seen enormous success as companies its incubated have innovated great ideas and got them adopted. It’s the adoption of the tech solutions these create that’s making the money. The trick is picking firms that answer real needs.. not those that imagine needs for something they’ve come up with.
The EV sector makes me giggle. So many brilliant new companies – almost more than there are potential buyers of EVs – all thinking they are the disruptive ones. Nope. They are competing in a very small space called cars.
Out of time, and back to the day job
Bill Blain
Shard Capital
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Obviously the eu is acting due to astray zeneca’s UK link.they are happy with Chinese, Russian, and American vaccines, and delayed buying from AZ in the hopethe French labs (pasteur) would create an eu vaccine, but they gave up, so reluctantly the eu ordered AZ, at the same time casting rumours on safety and being critical of supply issues. It just more anti UK feeling from the EU..
NSS. Advance shoulder sloping!
If you can undermine confidence in AZ, both the vaccine safety and the company’s integrity for tests and distribution equity & speed, you have multiple wins.
‘Safety’ excuse for lagging (further) behind roll-out targets & justification for being ‘prudentially cautious’ in tardy contracts to purchase & authorise vaccines. Shift the anger for all those unnecessary past & future unnecessary deaths away from EU authorities to AZ. This is total hypocrisy whilst barring exports and attempting to grab vaccines others needed & had purchased earlier. That failing leads to new pretext “If we aren’t allowed to use it; we aren’t short of it. In fact, we were clever not to purchase more!”
From a reader who asked to be annoymous:
“I’m sure my thought’s on this aren’t a revelation, but given the lack of medical evidence against the AstraZeneca vaccine, is this not a very clever tactic by the EU?
Because of the complete dogs dinner they have made of the programme thus far, and the supply issues they are dealing with, they suspend the AstraZeneca vaccine for two weeks(let’s say), while they “investigate”. After two weeks they tell their public “we’ve investigated, we had not choice, it’s our duty to protect you, but the good news is we have found nothing wrong”
In the meantime they have built up a far more healthy stockpile and have had two weeks improving facilities, training staff etc etc. They have also flipped the narrative from one of utter blundering incompetence which could potential endanger ??? more lives, to one of “we are the responsible, cautious, caring EU and you safety and wellbeing comes before everything!”
To be honest, it’s a stroke of genius.”
Let’s pull out our H.G. Wells binoculars and peer about 5-8 years into the EV future. Lo and behold! What is it that you see Cap’n? Well, I see only about 4 or 5 EV manufacturers. That’s it. The reason? People don’t buy cars anymore. In fact, in large metropolitan areas, people don’t even drive anymore. They don’t need to own a car or drive because the big tech companies will own massive fleets of autonomous driving EVs that pick you up at your doorstep and deliver you safely to your destination.
You can pay via your smart phone. In fact, because EVs will be constantly “talking” to each other, the biggest danger on the road will be human drivers. But apart from cars, what are the other big disruptions headed our way? How about car insurers? They could take a serious hit as people ditch their cars. How about anything that has to deal with individual car ownership like auto parts, tires, batteries, maintenance (Kwik Fix et al) and most of all….petrol.
And hey, how about petrol tax, road tax, speeding fines, parking fines, parking garages, etc. Municipal governments won’t be getting the revenue anymore from milking the individual car owner. What will they do? And please don’t forget those poor bastards, the car thieves. Does the inability to thieve allow one to go on the dole?
But the big reveal will be in two areas. A critical shortage of electricity (brownouts and blackouts here we come) and a substantial reduction in CO2. Obviously, Mother Earth will have something to say about that. After all, starving her beloved vegetation of its critical life support will not go down well with her. How she reacts is anyone’s guess. Let’s just say, human beings should be careful what they wish for.
It’s all happening so fast that it may catch people and the markets by surprise. Governments are totally unprepared for this type of disruption. As usual, they will be the least informed and last ones to realise what’s happening. So what else is new? Better secure the binoculars. It looks like rough seas ahead.
Fantastic Steve – spot on as always… although I still have my doubts about the future of autonomous driving. If we can’t get trains to run on a rail, how will cars or flying cars work?
You only have to look to Germany’s VW to see what adaption of technology will be
in the BEV space. Seventy percent of VW’s group European motor cars with be BEV’s
by 2030! Tesla, today is the hare, and VW is the tortoise. We know who eventually won that race.
I had my Astra Zenaca Vaccine this morning at 9.55 sharp at an incredibly efficient, purposeful, cheerful vaccine centre in Eastbourne. This is a great british success story and we are providing it to the world at no profit which makes me feel good as a UK person for the first time in a while! I’d guess this situation is Yoorp is one of those unconscious cognitive biases we are all meant to be eliminating , its specifically the so called ‘Confirmation Bias’ in which you warp data to fit or support your existing beliefs or expectations. Based on the Brexit narrative EU countries believe the UK to be a shortcutting, regulation undermining, institutionally bankrupt country which wants to make money for itself at others’ expense and can’t be trusted. With this as the background mindset it turns out it’s really easy to massively undermine your economy by preventing the vaccine rollout and your populations won’t mind because they have this same bias about the British. The fact that the vaccine is being supplied at no profit and there is no actual data to support the suspension vs. the considerable profit embedded in the Pfizer and Moderna vaccines does not seem to be computed in this bias.
The EU needs to punish the UK for leaving . . . and then having a successful vaccination campaign. Even worse, the UK got better deals from pharmacos than the EU. Some countries might get ideas
I am sure there is an element of that, but the potential breakdown of the Brexit agreement on intransigence by both sides will be massively sub-optimal for UK and Europe. Someone needs to step back – but it wont be UK….
Here in Canada there is a buzz going around that Phizer may be behind some of the bad-mouthing of the AZ vaccine. Given the hundreds of millions – nay, billions of dollars being invested by governments in covid vaccines, the fact that the Phizer product costs somewhere in the $30-40US range per shot whereas the AZ one is supplied at cost could mean a short life for the Phizaer one. Even a few weeks hold-up of the AZ stuff means millions more into the Phizer coffers.
It seems extraordinary that Europe would support Pfizer if that is the case… I really do think AZ are going to come out of this smelling sweetly.
The blow-back for Pfizer would be existential. I’d stick to the rather grubby exploitation of some isolated coincident thrombosis cases as the very dangerous distractor that EU ‘politicocrats’ are cynically promulgating. Lethal as it legitimises ant-vacc’ers and conspiracy extremists to subvert the credulous.