A muddled pandemic picture in the U.S.

By Whitney Tilson

Tuesday, January 11, 2022
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With the S&P 500 Index closing yesterday only 2.6% below its all-time high a week ago, the market clearly expects that the omicron variant won't seriously derail the booming U.S. economy.

The consensus expectation among investors mirrors what I've been saying for more than a month now: that the course of the pandemic in the U.S. is likely to follow a similar path to what's happened in South Africa and the United Kingdom – namely, that cases will skyrocket, but will quickly peak and rapidly decline, without a huge surge in hospitalizations or deaths.

I continue to believe that this is the most likely outcome, but I'm not quite as certain as I was as recently as a week ago, because of complex, confusing, and inconsistent data coming in from around the country.

Below is the first part of the e-mail I sent last night to my coronavirus e-mail list (as always, to join it, simply send a blank e-mail to: [email protected]) in which I described the muddled picture... You can read the entire e-mail here.


Following up on my e-mail earlier today, I'm puzzled why the data for the omicron wave in the U.S. isn't as uniformly positive as it is in South Africa, the U.K., and Denmark.

This chart Dr. Kevin Maki sent me this afternoon shows the incredibly good news from the U.K.:

Cases skyrocketed, but: a) appear to have peaked... and b) ventilated patients and deaths have barely budged. (The data is equally good in London – click here.)

This is consistent with the data from the first-hit area of South Africa (source):

And Denmark as well (source) – when you compare cases, ICU patients (much more relevant than hospitalizations), and deaths per million in Denmark, the U.K., and the U.S. – you can see that we're a week or two behind in cases, but are already much worse in ICU patients and deaths:

The New York Times article in this morning's e-mail, Early Data Hints at Omicron's Potential Toll Across America, also had six charts showing troubling trends in four cities for deaths, hospitalizations, ICU patients, and ventilated patients:

So what's going on?

To some extent, the NYT is cherry-picking the worst data and/or presenting it in the worst way. Here are some alternative charts that show NYC in a much better light (cases may have even peaked... we'll soon know if they have or if it's a delay in reporting the data) (source and source):

NYC Cases

P.S. Not that there's any doubt, but here's NYC data showing omicron almost completely replacing delta:

Patients in hospitals and ICUs in NYC

Daily deaths in NYC

Nationwide, the story is complex, confusing, and inconsistent, as this chart (from the Financial Times) in Dr. Katelyn Jetelina's latest post (in this morning's e-mail) shows:

If you look closely, you'll see that in the three most populous states (in order), California, Texas, and Florida, the number of hospitalized and ICU patients is far below the peak of a year ago (the latter two likely because they had big delta-driven surges a few months ago):

But the next four states, New York, Pennsylvania, Illinois, and Ohio are seeing much bigger spikes:

So, in summary, it's a muddled picture.

To shed some light on this, I (surprise!) turned to Dr. Maki. Here's his latest thinking:

It is striking that in most states the decoupling between cases and hospitalizations is clear but it is not in a few. My best guess is that we are seeing a mix of omicron and delta.

Recall that the CDC reported about three weeks ago that the fraction of omicron was 73%, then came out the next week and said it was under 25%. Now they are saying 95%. We do a relatively poor job of sequencing in the U.S. and are only taking a small sample of positives to sequence for identification of the variant, so the penetration of omicron may be more uneven than is suggested by the 95% proportion. The small number of samples tested means that the confidence interval around the point estimate is wide.

I think that the Midwest is still seeing quite a few cases of delta because their delta wave was really getting going when Omicron hit. I anticipate that will change with time.

It is hard to say how much the lack of decoupling might also just be variation or differences in practice across locations (in some places doctors may be more apt to admit out of an abundance of caution).

I expect that we will see omicron continue to increase in dominance over the next couple of weeks. In many places it appears that case numbers have peaked and are starting to head down (including Florida).

I am cautiously optimistic that we are close to being on the back end of the omicron surge and continue to believe that we will be transitioning into an endemic situation over the next few weeks.

I certainly hope Dr. Maki is right!


Here are additional topics I covered in the rest of my e-mail:

  • A pandemic almost exclusively of the unvaccinated
  • Two reader comments
  • Comments by Dr. Edward Ryan of Mass General
  • Will we all get COVID?
  • Q&A with Dr. Maki
  • 4th shot
  • Five posts by Dr. Katelyn Jetelina
  • Graphic on masks
  • Karma
  • Articles

Again, you can read the entire e-mail here.

Best regards,

Whitney

P.S. I welcome your feedback at [email protected].

Whitney Tilson
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About Whitney Tilson

Prior to creating Empire Financial Research, Whitney Tilson founded and ran Kase Capital Management, which managed three value-oriented hedge funds and two mutual funds. Starting out of his bedroom with only $1 million, Tilson grew assets under management to more than $200 million.

Tilson graduated magna cum laude from Harvard College with a bachelor's degree in government in 1989. After college, he helped Wendy Kopp launch Teach for America and then spent two years as a consultant at the Boston Consulting Group. He earned his MBA from Harvard Business School in 1994, where he graduated in the top 5% of his class and was named a Baker Scholar.

Click here for the full bio.