COVID-19 – SLAYING THE RATIONAL SKEPTIC, MORTGAGING OUR ECONOMIC FUTURE & SQUASHING THE POOR

Beginning the second week of February 2020, based on reports emerging from Iran, I became increasingly concerned that COVID-19 was infecting a substantial number of people worldwide. It had somehow leapfrogged from Wuhan to Tehran, and the stated death rate in Iran at the time was much higher than that disclosed by China. Fearing the worst given our limited knowledge of COVID-19, I promptly raised cash in client portfolios to 20%, and then within a week to 30%. Since then, what has transpired has been astonishing; scientifically and economically.

The scientific community has delivered on its calling. Vaccine development has broken all records with multiple Phase-3 trials underway. One, maybe two could receive regulatory approvals before the end of 2020. Drugs companies are seeking and, in some instances, have been granted emergency use authorisation from the FDA for hastily conjured products in the lab, or previously shelved products (Remdisivir). These drugs are helping patients recover faster in hospitals. President Trump successfully took it upon himself to lead by offering to be a guinea pig for one of Regeneron Pharmaceuticals Inc.’s drugs under development.

Governments worldwide, elected or otherwise, have undertaken extensive measures to quarantine and isolate populations within and beyond. Unprecedented fiscal and monetary measures have cushioned the economic blow for households and businesses. In the aftermath, government finances stand decimated, and conservative savers face bankruptcy. The G-7 is now entering the eight-month of lockdown followed by re-openings and lockdowns again. Citizens are quasi-free, with restrictions to movement, mobility, and social-gatherings - self-imposed or otherwise - becoming recurrent. As the Northern hemisphere cools and enters the regular flu and influenza season, it now must face the second wave of COVID-19 as well. Although the second wave of COVID-19 was expected and forecast by health experts, news headlines appear to suggest calamity ahead!

Nothing could be further from the truth. 

More Fiction Than Fact

It is ANTYA’s view that an anxious populace has lapped up erroneous information (error “NOT in fact” but the error “lacking a perspective”) emboldening incumbents and special interests while creating political discord. President Trump’s numerous missteps on issues unrelated to COVID-19 (discussed ad-infinitum by political and socio-economic watchers worldwide) have undermined his ability to support a fact-based perspective on COVID-19. Prime Minister Trudeau, dependent on the NDP for support, has allowed compassion, accommodation, poor advice and a desire to win a majority the next time around, to override stricter scrutiny of the data emerging on COVID-19, and lessons thereon. Elsewhere in developed Europe, issues facing politicians and the general population are like those in N America. The entire western world has transitioned from muscular to flabby overnight.

COVID-19 has provided a platform to political leaders to display empathy in front of a T.V. audience while sowing fear and doling out cash in the hope of being re-elected. It has worked wonders for political leaders worldwide except you know WHO? While views in Canada are aligned, the ongoing match between CNN and Fox on anything and everything in the U.S. is preposterous. Canada needs more variety in its discourse, while the U.S. needs sanity.

Who is making the decisions?

It is well-known that COVID-19 kills those with a weaker constitution, comorbid conditions, and the old amongst us. The institutional world around us, as we know, see, and experience; was created by the older generation. It is to protect them that all of us are being called upon to be less free, less mobile, less secure (at least financially), and generally be less of everything so that they can live with dignity.

 A younger group of leaders and bureaucrats that has done little to create a prosperous G-7 is foisting edicts upon unsuspecting citizens with impunity. Given the cushy roles and responsibilities of these civil servants – steeped in job security – they are oblivious to the carnage underway in the small and medium business sector of North America. When lifelong retirement security in the form of a taxpayer-funded defined benefit pension plan is par for the course, diktats surrounding “how to lead a life in a pandemic”, and “no indoor dining” appear appropriate and just.

However, the cost borne by the economy and the taxpayer is enormous. The NYT reported today that “ 8 Million Have Slipped Into Poverty Since May as Federal Aid Has Dried Up[1]”. The Canadian situation is especially ironic. The taxpayer-funded healthcare system is imploring taxpayers to protect it by not overwhelming it; forcing Canadians into unemployment or underemployment. Many survive by going on a dole such as the CERB, or an unemployment benefit such as Unemployment Insurance. The C$81.64 billion question that arises is that has our collective sacrifice been worth it[2]?

The answer to that is NO.  

COVID-19 statistics disclosed by Canada are intriguing, indeed.

( All Canada data as of October 08, 2020, 7:00 PM)  

Figure 1 outlines the case count in Canada since the beginning of the crisis.

Figure 1: Distribution of COVID-19 by Age & Sex in Canada

Source: Government of Canada

Canada has reported 178,117 cases since the crisis began, of which 84% have recovered while 5.4% totalling 9,585 are deceased. The remainder comprises active cases, some of which are in hospitals and others in quarantine. The 70+, and the 80+ age-group, account for 89% and 71% of the overall mortality in Canada. In general, more women than men have been infected, with the gap increasingly unfavourable to women in the 80+ cohort. Although the case count captures all cases, reported hospitalisations cover only 65% of the cases. It is in hospitalisation data; for Canada and Toronto that we find a disconnect between the promised social contract and its delivery. Figure 2 is self-explanatory.

Figure 2: Older Canadians Left at the Altar

Source: ANTYA Investments Inc. & Statistics Canada

An important indicator that determines the severity of this pandemic is the case fatality rate (“CFR”) which juxtaposed with the effective reproductive number (“R.I.”) determines the rapidity with which a general population could get infected causing a spike in mortality. By limiting physical proximity, infectious disease experts are intervening to limit R.I., thereby constraining CFR. As Figure 2 highlights, the CFR for 60+ age group is 4.8%, for the 70+ is 17.2% and for the 80+ is 33.5%. For those below sixty years of age, it is not meaningful. 

More importantly, Figure 2 highlights that physicians, hospital administrators and other decision-makers across Canada have denied hospitalisations and ICU admissions to the neediest. Precisely the people we are all trying to protect are not being provided for by the healthcare system. What gives? Earlier in the epidemic, a lack of protective gear and little understanding of COVID-19 could have contributed to this anomaly, but why it persists eight months into the pandemic should be investigated.

There’s More Than Meets The Eye

Could the decision NOT to hospitalise be contrived and conscious? Disclosed data suggest that doctors determined that individuals denied hospitalisation are unlikely to survive with or without. Therefore, better without! The logical question that follows is that: are doctors playing GOD to the sick, while the bureaucrats and the politicians play GOD to the rest of us? Controversial or not, our viewpoint is substantiated by the definition of premature mortality as defined in the Ontario Atlas of Adult Mortality (version 1.0 of published in February 2018). We quote from Version 2.0.

“Premature mortality includes all deaths registered in Ontario between 1992 and 2015 among decedents who were between 18 and 74 years old at the time of their death. The age cut-off of 75 years is consistent with the upper age limit used by CIHI when using premature mortality as a health indicator (12), and with definitions of premature mortality in practice in other countries (25-27)……. Premature mortality is a subset of all-cause mortality, including only the deaths of those who die before age 75. In general, premature mortality rates are more likely than all-cause mortality rates to be reducible via medical or public health intervention (see ‘Amenable Mortality’ in this report). They are thus highly meaningful for population health assessment. ….”

Thus, the powers that be are indicating that only CFR below the age of 75 matters in deciding public health policy. If that deduction by us is valid, then the disclosed severity of this pandemic needs greater scrutiny. In the interim, all pronouncements surrounding imminent danger to public health should be withdrawn.

If our deduction is untrue, then explain the discrepancy in data, and instead of lockdowns and restrictions, the health authorities should build spare hospital capacity, albeit temporary, where all those requiring non-ICU and non-intubation type of assistance can be isolated and allowed to recover. The current approach of lockdowns and physical distancing preventing social-gatherings has undermined large swath of the travel, tourism, media, entertainment, sports, education, and other businesses and continues to undermine the economy.

As illustrated in Figure 3, the CFR in the 70+ age group is 28x that of the less than 70+ age group.

Figure 3: Case Fatality Rate by age in COVID-19 Patients

Source: ANTYA Investments Inc., CDC & Statistics Canada

Data from the U.S. is not directly comparable to that of Canada given that the U.S. data refers 75+ and the below 75 age groups. Nonetheless, the trend is evident.

Do not compare 1918 Influenza to 2020 COVID-19

Since the 1918 pandemic is now a part of the public’s consciousness, we present data contrasting the severity of 1918 with the challenges of 2020.

Many commentators, analysts, decision-makers and journalists have latched on to the consolidated CFR approaching 6% - i.e. 6 out of 100 infected with Covid-19 are deceased - in comparing the current pandemic to the 1918 influenza strain that was reportedly responsible for 50-100 million deaths worldwide[1]. The 1918 Influenza pandemic had a reported CFR of >2.5%. We all know that deductions are as good as the data on hand and the analysis thereof. If such a simplistic comparison of the two pandemics has driven our public policy so far, only GOD almighty can help us going forward. Figure 4 breaks down the CFR of the COVID-19 epidemic by age and compares it to the oft-quoted 1918 Influenza pandemic.

Figure 4: CFR: COVID-19 and 1918 Influenza

Source: ANTYA Investments Inc., CDC, Statistics Canada

In our view, for the age-group that matters to the economy, as illustrated in Figure 4, the 1918 pandemic was far more virulent than COVID-19. In the U.S., in the 15+ age group, the CFR in 1918-1919 was more than 2%, increasing to 3% for those that were 25. We estimate that 1918-1919 CFR averaged 2% for the 15-60 age group for the U.S. That compares to 0.2% for COVID-19 in Canada. That is the reason behind Canadian data not registering on the scale in the graph in Figure 4. It shows up in blue once we reach the 60+ cohort. Ninety-nine per cent of all fatalities concentrated in the 0-60 cohort occurred in the 50+ cohort. 

Figure 5 highlights the CFR for Canadian metropolitan areas of Montreal and Toronto during the 1918-1919 epidemic. 

Figure 5: 1918 Montreal, Toronto and the U.S. CFR

Source: Age-Specific Mortality During the 1918 Influenza Pandemic: Unravelling the Mystery of High Young Adult Mortality, www.plosone.org

As illustrated in Figure 5, in 1918-19 Ontario, the CFR was much higher than in the U.S. for some age-groups. If we can all agree that the prime-age population is the healthiest cohort of any demographic, then Figure 4 and Figure 5 provide irrefutable evidence that the viral flu of 1918 was far more dangerous than COVID-19. The average age of a U.S. citizen in 1920 was approximately 53 years compared to 79 years in 2019. A Canadian had a life expectancy of 59 years in 1920 and 82 in 2017.

Thus, the current crisis is demographic and lifestyle-related, rather than a calamity that has befallen the populace.  

What is catastrophic is the repeated lockdowns and restrictions in place across vast swaths of Europe and N America. It is evident that such actions are causing poverty, financial hardship and untold misery to millions of small and medium business enterprises, young entrepreneurs, low skilled and unskilled immigrants and workers, less qualified women in the workforce, and an entire generation of school & university students. It also creates financial and job uncertainty for millions of highly skilled workers in the non-IT space.

The bureaucrats and the politicians are not doing any American or Canadian citizen any favour by doling out funds when the entire economic system is teetering.

We Do Not CONDONE That Economic and Social Inequity has Always Existed

There has been significant media commentary on economic inequity in the society, elaborating a more significant COVID-19 burden on the less fortunate. In our view, that is not insightful but a regurgitation of well-known truths. A lack of potable drinking water in Africa is not because Africans are never thirsty. It is because they lack the resources to create potable water, which results in all types of avoidable water-borne illnesses, causing premature mortality. That fact is true for Ontario as well (no we are not referring to Walkerton), and is examined in the Ontario Atlas of Adult Mortality, as highlighted in Figure 6.

Figure 6: All Cause Premature Mortality by Income Quintile in Ontario

Source: Adult Mortality Atlas of Ontario

As shown, premature mortality amongst the top quintile of the population is less than half that of the bottom quintile. Thus, COVID-19 is merely surfacing known truths and is not creating a new narrative, unlike the hysteria created in mainstream media surrounding this issue. A kowtowing media has provided unneeded legitimacy to celebrity seeking politicians, social activists, ill-informed bureaucrats, and drab infectious disease experts to collectively undermine the most disadvantaged sections of the society, under the pretext of “protecting the vulnerable”.

How Much is Too Much?

Figure 7 highlights some of the costs borne by Canada so far. It is not the complete tally by any means.

Figure 7: The Cost of Protecting the not so Vulnerable in Canada

Source: ANTYA Investments Inc. and PBO

These policies, announced by much fanfare but presented somberly, are expected to cost Canadians approximately $164 billion. There are additional emergency measures which we have not included in Figure 7. Since the primary purpose of the emergency lifeline is to save lives in the 75+ age group, we decided to run some numbers.

1.      As of July 01, 2020, Canada had 1.2 million individuals in the 75+ age group, with 30% older than 90[A].

2.      On that basis, the average lifespan of an individual after 75 is approximately ten years.

3.      If we assume that $164 billion is the entire amount spent, the Government of Canada devoted approximately $16.4 billion for each year of life for those in the 75+ age group.

4.      That implies $13.6 million per citizen in the 75+ age group.

Last we looked; the pre-tax earnings of the so-called Top 1% in Canada averaged $477,700 for 2019[B].

Canadians Need a New Paradigm

We are not debating the morality of the expenditures; just saying that it is egregious.

We are not condemning the policy to promote public health; just saying that the thinking and approach are flawed.

We are not saying that Canadians should do less; just saying that we have done enough.

American Data on Comorbidity Highlights General Population is Safe

To say anything about the United States and its response to COVID-19 is a lose-lose proposition. The United States has been embroiled in controversy ever since President Trump assumed office. The vexatious socio-economic environment, especially since early 2020 when COVID-19 began to spread in communities across the country, tore civility in public life to shreds. It should be no surprise that COVID-19, with its restrictions on lifestyle, is a non-starter in a country where many believe it is their right to carry machine guns, and open carry is a rallying cry. After all, it is the land of the free! 

Beyond politics, the quality of data from the CDC is far more granular than that collected by Canada, especially regarding comorbid conditions. Figure 8 highlights that irrespective of age-group, comorbidities determine the outcome and that mass lockdown are unlikely to assist. 

Figure 8: COVID-19 Mortality and Comorbid Conditions

Source: ANTYA Investments Inc. and CDC

Of the 196,639 deaths attributable to COVID-19 in the U.S., 112,553 were in the 65+ age group. In the 0-24 cohort, there were 437 deaths. In the 0-29 age-group in all of Canada, there were thirteen deaths. However, what is consistent is that all these unfortunate individuals had multiple comorbid conditions, which we have divided into respiratory (Blue), and non-respiratory (Red). Given that the CDC collected detailed data based on reimbursement codes of the U.S. healthcare system, data on every condition is available by age group and by the comorbid disorder. On that basis, we estimate that every patient that died had both, a respiratory problem, and more than one severe non-respiratory condition.

Therefore, we estimate based on aggregated data, that on average, those that died from COVID-19 in the U.S. had 2.8 underlying conditions.

What can we Conclude?

·        COVID-19 is NOT as dangerous as the 1918 epidemic

·        Health authorities should manage COVID-19 better by isolating the physically compromised individuals rather than by shackling the entire society

·        In the U.S., obesity, and a diabetes crisis, both of which result in multiple other severe conditions is already prevalent. CDC has documented both the age profile and the ethnicity of the obesity & diabetes crisis, and it was evident that the Hispanic and the Black populations will be disproportionally affected.

·        Canada too has well-documented data highlighting the socio-economic characteristics of disease, health, livelihood, and longevity of life. We shared some from Ontario in this report. COVID-19 is not recreating that wheel.

Canada’s debt shot up from 31.3% of GDP for 2019-2020, to an estimated 47.9% of GDP for 2020-2021. Federal Debt in the U.S. went up from 79% of GDP at the end of 2019, to 98% of GDP for 2020. For $10 billion, Canada would have had 100,000 extra beds in its hospitals, and the country would have saved over $100 billion in emergency response benefits and the dislocation of millions of its citizens.

Finally

Governments, politicians, bureaucrats, and public health professionals cannot and should not hide behind their desks while pontificating to millions that need to earn a living to stay put. I invite all those involved in the decisions to confine populations, to contribute their salaries, pensions, and savings to a public fund, for the benefit of small and medium business, self-employed professionals, and others in the bottom quintile of earnings. Canada sent low wage youngsters to die as soldiers in World War 1, World War 2, the Korean war and umpteen U.N. peacekeeping missions. There is no harm in expecting its very well-paid doctors, nurses and hospital staff to do the same for the country, and if they are in the frontline, so be it.

And lastly, if you have been waiting on the sidelines for a better entry point in the equity markets, unless a disputed election in the U.S. spooks investors, consider your investment opportunity sidelined. This report merely reflects what the equity market already knows, i.e. COVID-19 is not “The killer Virus”; just nuisance. 

[A] https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000501

[B] https://www.ctvnews.ca/canada/canada-s-top-1-per-cent-saw-fastest-income-acceleration-overall-decrease-in-taxes-1.4609196

[1] 1918 Influenza: the Mother of All Pandemics, Jeffery K. Taubenberger and David M. Morens

[1] https://www.nytimes.com/2020/10/15/us/politics/federal-aid-poverty-levels.html?action=click&module=Top%20Stories&pgtype=Homepage

[2] CERB benefits paid out as of October 04.2020