Managing Risk

[Updates Below] Tuesday, January 3, the World Health Organization’s Technical Advisory Group on Virus Evolution (TAG-VE) met to review new information on SARS-CoV-2 variants. Here are excerpts from the January 4 TAG-VE statement:

As of 3 January, 773 sequences from mainland China have been submitted to the GISAID EpiCoV database, with the majority (564 sequences) collected after 1 December 2022. Of those, only 95 are labeled as locally-acquired cases, 187 as imported cases and 261 do not have this information provided. Of the locally-acquired cases, 95% belong to BA.5.2 or BF.7 lineages. This is in line with genomes from travellers from China submitted to the GISAID EpiCoV database by other countries. No new variant or mutation of known significance is noted in the publicly available sequence data… WHO will continue to closely monitor the situation in the People’s Republic of China and globally and urges all countries to continue to be vigilant, to monitor and report sequences, as well as to conduct independent and comparative analyses of the different Omicron sublineages, including on the severity of disease they cause.

Surveillance capabilities in most nations range from partial to pitiful. Accordingly this blog has long focused on covid hospitalizations as the most meaningful (if lagging) indicator. Reuters reports, “China’s COVID-19 data is not giving an accurate picture of the situation there and underrepresents the number of hospitalisations and deaths from the disease, a senior official at the World Health Organization said on Wednesday.” Today, January 5, China released new hospitalization data. If anything, the results confirm widespread skepticism regarding official veracity.

A “new” variant is a source of increasing concern in the United States. Here is how XBB.15 was explained in an American Medical Association January 4 update:

Scientists are really still in the early stages of studying that XBB subvariant and that even newer version, the XBB.1.5. Preliminary studies have shown that the newer version is adept at evading existing immune response and at binding to human cells. Both XBB and XBB.1.5 are recombinants of the BA.2 variant. And according to CDC data, over 40% of COVID cases in the U.S. are now caused by the XBB.1.5 subvariant. And that’s doubled from the previous week. And if you look at the data in the Northeast, about 75% of confirmed cases are reported to be XBB.1.5. So these appear to be very contagious. I think the good news so far is there’s no indication at this point that it causes more severe illness than the other Omicron variants do. I think experts do agree that getting that bivalent booster dose to bolster your immune system against these newer subvariants is the most important thing to do and we’ll definitely continue to watch as things progress with these variants.

The Financial Times explains:

XBB.1.5 is informally called Kraken after the mythological sea monster, one of a number nicknames that scientists have applied “to help people keep track of the ever-growing variant soup”, said Ryan Gregory, an evolutionary biologist at Canada’s University of Guelph in Canada. “There are now more than 650 Omicron subvariants.” Kraken is descended from XBB or Gryphon — itself a hybrid of two Omicron BA.2 descendants. A key mutation enables XBB.1.5 to transmit rapidly between people by evading antibodies conferred by previous infection or vaccination, while at the same time binding more tightly to human cells. “While there’s still much to learn about this variant, it doesn’t have the look of a ‘scariant’,” said Eric Topol, professor of molecular medicine at Scripps Research in California, referring to the term he coined for strains that sound scary but are not really dangerous. “This one is the real deal and we’re betting on our immunity wall of infections, vaccinations, boosters and their combinations to help withstand its impact,” he added. (More)

Meanwhile California is flooding in yet another example of increasingly extreme weather, the winter war worsens, political dysfunction persists, global effectual demand declines, immediate threats of hunger and violence drive desperation, displacement, and large-scale human migration…

Risks abound. Threats proliferate. Vulnerabilities escalate. Consequences multiply. Our data is incomplete and too often unreliable.

Because this is our reality, we can benefit by being widely observant, avoiding or resisting over-reaction, while fully prepared to probe, decide, and actively care for ourselves and others as prudently, creatively, urgently, patiently, and persistently as possible.

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January 6 Update: Linked via “More” at the close of yesterday’s FT quote (above) is a Bloomberg piece on XBB.1.5 (Kraken). This morning that story is listed at the top of the “most read” on the Bloomberg website… encouraging evidence of decision-makers being widely observant.

January 11 Update: Based on what I can see and hear out of China, worst-case probabilities related to coronavirus mutations are easing (here and here and here and here). Today the economic horizon seems to be opening to improved demand and supply from China, with significant implications for supply chains.

But my ability to see and hear is too constrained to be confident. The viral pot could still boil over, especially in the aftermath of the current Lunar New Year holiday. From a supply chain resilience perspective, premature risk discounting could still unfold into flow disruptions, volatility, and destruction (more and more).

Writing in the Financial Times, Robert Armstrong and Ethan Wu comment:

The bear case is rather less precise, but comes down to reopening being very hard, and very hard to predict. An even bigger second wave of Omicron cases, a politically intolerable death toll that prompts lockdowns, a collapsing healthcare system, a deadlier variant — any of these could blow apart market optimism. An on-again-off-again approach to lockdowns would crush the economy and shatter markets’ newfound confidence.  

Humility is a very practical virtue, especially for 2023.

January 13 Update: In late November China began to re-open. December’s economic momentum reflected prior counter-covid constraints. (So will January and, probably, February. After that?) One of my five “vital signs” for global supply chain fitness is the volume and value of China’s exports. According to this morning’s Financial Times, “China’s exports suffered the sharpest decline in almost three years in December… Exports declined 9.9 per cent year on year in dollar terms in December, according to official data released on Friday by China’s general administration of customs, worse than November’s 8.7 per cent fall but slightly outperforming expectations of an even greater contraction. Imports slid 7.5 per cent last month, up from a 10.6 drop the month before.”

January 14 Update: Reuters reports, “Between Dec. 8 and Jan. 12, the number of COVID-related deaths in Chinese hospitals totalled 59,938, Jiao Yahui, head of the Bureau of Medical Administration under the National Health Commission (NHC), told a media briefing.” This increase reflects a change in the standard of measurement being utilized. While much higher than previously reported, this number is still treated skeptically by many who expect reopening will produce much higher fatality rates. (More and more)

January 17 Update: Bloomberg reports, “The nearly 60,000 Covid-related deaths China reported for the first five weeks of its current outbreak, the largest the world has ever seen, may underestimate the true toll by hundreds of thousands of fatalities, experts said… Using a report from the National School of Development at Peking University that found 64% of the population was infected by mid-January, he [Zuo-Feng Zhang, chair of the department of epidemiology at the Fielding School of Public Health at University of California, Los Angeles] estimated 900,000 people would have died in the previous five weeks based on a conservative 0.1% case fatality rate. That means the official hospital death count is less than 7% of the total mortality seen during the outbreak.”

January 27 Update: For the last two weeks covid reports out of China have been ambiguous. The official line is clear enough (more), but the subtext is a like a Keith Moon drum set sharing the stage with a Mozart concerto. Here’s an example from this morning’s Financial Times, “Chrysanthemum flowers, a symbol of mourning in China, are selling out in cities across the central province of Hubei, with prices rising sharply as demand surges following a wave of Covid-19 deaths.” There is a steady drum-beat of death. I am especially concerned about mutations, but over the last two weeks nothing definitive. From a global supply chain perspective, if the official line is accurate and sustainable, China’s export engine will continue to chug along and, gradually, China’s less-constrained domestic demand will play its part in simulating global economic activity, improving chances for a rising tide that will lift all boats — especially — container ships (more). But a virulent mutation would undo this quickly — and recent increased transmission rates spike the chance for a more varied range of mutations. So… several years ago I was awakened in my hotel room by thuds and screams from the room behind my bed. It was either some unusually vigorous sex or deadly violence. My heart-pumping uncertainty was finally resolved when the convulsive pounding assumed a more rolling rhythm… and I returned to sleep. What would I have done if the acid-rock drum-roll had continued?