Liam Dann: How to beat the Omicron dread as we wait for answers


I’ve spent the last week trying to pretend I’m not obsessing over every little bit of Omicron news.

There’s absolutely no point panicking about the new variant until we have more information …

Well, that’s what I told myself as the deep waves of dread washed over me.

How transmissable is it? How deadly is it? Will the vaccines hold up against it?

The idea that we might be plunged back to square one in our pandemic response is too cruel to contemplate.

Summer is here, Christmas is coming, Auckland is opening up and the public mood is lightening.

There’s test cricket on.

So, I’ve been checking the news wires with the same kind of fatalistic rigour as I do following the Black Caps batting on a crumbling Indian pitch.

No news is good news, right?

And frankly – to finish the cricketing analogy – a draw could end up being a pretty good result with this worrying new Covid variant

The depressing bit about the Omicron variant is that a stable recovery pathway was finally starting to emerge – both here and around the world.

The global economic outlook is not perfect by any stretch, but inflation provides a considerably more precedented and far less deadly alternative to new lockdowns and border closures.

The uncertainty was easing – just a bit.

Omicron comes as a reminder that the pandemic is not done with us yet.

With its villainous sounding name, it’s like that last jump scare they throw in at the end of a horror movie.

However serious it turns out to be, it highlights the risk that the evolution of this virus continues to bring.

The virus evolves, we adapt.

On the bright side, we are getting better and quicker at adapting.

For that reason, I don’t think the worst-case scenario takes the world back to square one in its pandemic fight.

We are in a very different world from the one that dithered and hoped for the best in the early months of 2020.

Global markets seem to have taken this view.

Broadly they are off about 5 per cent in the first week since the news broke.

But it’s been a wild week of volatility – slumps and rallies.

In times of global strife, global markets can offer a good barometer of how serious a situation is.

They offer a collective real-time assessment of risk.

Investment firms have billions riding on that risk assessment and they don’t have to finesse things the way political leaders do.

I have confidence that their analysts are doing far more detailed research into issues than I ever could.

But they are definitely prone to wild swings in the absence of solid data and that’s exactly what we’ve seen in the past week.

There have been mixed messages, to say the least.

Markets slumped on the initial news but rebounded Monday on suggestions that Omicron cases had less severe symptoms than Delta.

They plunged again on Tuesday as Stéphane Bancel, the chief executive of Moderna, said it didn’t look like the efficacy of his company’s vaccine would hold.

“There is no world, I think, where (the effectiveness) is the same level … as we had with Delta,” Bancel told the Financial Times.

Falls across Tuesday and Wednesday were the most severe since October 2020.

But (as of Friday NZT) markets were rallying again on more upbeat news from Pfizer – which says its new anti-body treatment looks likely to work against Omicron.

And there are comments from the World Health Organisation’s chief scientist, Dr Soumya Swaminathan, who thinks vaccines will still protect against severe disease.

US markets also liked JP Morgan analysts saying that Omicron’s milder symptoms could actually mean an end to the pandemic.

If it’s more transmissible but less deadly, that would fit historic patterns of virus evolution, analysts Marko Kolanovic and Bram Kaplan wrote in a report which suggested investors should buy into this slump.

“If that scenario were to happen, instead of skipping two letters and naming it Omicron, the WHO could have skipped all the way to Omega [the last letter of the Greek alphabet],” they said.

Frankly, that’s a big “if”.

It certainly won’t end my anxiety yet.

But it’s a nice thought and does give us a best-case scenario to counter the worst.

Reality – as it usually does – will likely land between the two extremes of optimism and pessimism.

US Treasurer Janet Yellen offered more cautious reassurance on Friday, suggesting the world would cope but that it might slow the reopening process.

“There’s a lot of uncertainty, but it could cause significant problems. We’re still evaluating that,” she told Reuters.

She pointed out that it could make supply chain problems worse and boost inflation.

Then she added that it might also depress demand and cause slower growth, which would ease inflation pressures.

We should take that as another reminder that all economic forecasts remain highly vulnerable to radical and rapid change.

That’s especially true for the next few days as the impact of Omicron becomes clearer, but also for the next few months as the virus evolves again in directions we can’t yet predict.

Now more so than ever, when we read that interest rates are likely to rise, we need to remember that they might not.

Or that they might yet need to rise even faster.

Living with this elevated level of uncertainty is no fun.

But it seems preferable to kidding ourselves and suffering unnecessary angst when the ball doesn’t bounce our way.

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