Cumberland Advisors Market Commentary – Israel & Vaccines

Israel: The World’s COVID-19 Vaccination Case Study

Market Commentary - Cumberland Advisors - Israel & Vaccines

Imagine a country of 9.3 million with a well-designed vaccine program that has administered 70+ doses of the Pfizer vaccine per every 100 members of its population thus far. Israel’s policy has been to pay a premium for supply and to actively and effectively manage distribution. They recognized the importance of speedy delivery. Israel is the world’s evolving case study in what vaccines might be able to accomplish.

Israel-Vaccines-Chart01

Israel, a high-tech center in many ways, has directly turned the COVID trajectory around. Our World in Data offers a series of charts documenting the impact that Israel’s vaccination program and other measures are having to date. We’ve included a key chart below. See https://ourworldindata.org/vaccination-israel-impact for the entire series.

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Here’s a curated research paper that discusses the Israeli vaccine rollout in detail: https://github.com/hrossman/Patterns-of-covid-19-pandemic-dynamics-following-deployment-of-a-broad-national-immunization-program. Warning: it is technical, but it has a lot to reveal to those who are willing to learn from others’ experiences.

And here’s a graphic summary that is extracted from that paper. The pictures tell a tale of success that includes both the impact of mitigation measures (Israel’s third lockdown) and the impact of the country’s aggressive vaccination program. The chart below confirms the difference that vaccinating sooner rather than later makes. Obviously, other mitigation measures have also played a role.

Israel-Vaccines-Chart03

The detailed vaccination case study that is emerging out of Israel has been made possible, in part, by the agreement Israel forged with Pfizer. Israel promised to share on “a reasonable basis … information and data regarding the distribution, administration and use” of the vaccine because the country and the company agreed that it is “highly beneficial from a public health perspective to track pandemic data … to evaluate whether herd immunity protection is observed….” (Real-World Epidemiological Evidence Collaboration Agreement,” https://govextra.gov.il/media/30806/11221-moh-pfizer-collaboration-agreement-redacted.pdf). The information to be shared was not personalized. The world is paying attention to lessons the data afford.

Despite Israel’s strong vaccination effort and its success in bending the epidemiological curve, the outcome of its race against the virus is not a foregone conclusion. Israel, like the rest of the world, is striving to stay ahead of new, more contagious variants of SARS-CoV-2 that are positioned to become dominant strains. Israel expects the process of reopening to be “a balancing act” requiring months as the nation’s fight against the virus is potentially complicated by more contagious and deadly variants and other factors. (“Israel, a global leader in COVID vaccinations, finds limits,” https://apnews.com/article/israel-discovers-limits-virus-vaccines-febc365b0f1ab0d794c49e4b7a1fe7f3) We plan to address vaccines and variants in greater depth next week.

Some ultra-Orthodox groups, in particular, have seen far higher infection rates than the general population has. Devoutly embraced religious practices surrounding ultra-Orthodox funerals, for instance, undermine infection control efforts; and families live in close quarters, where the virus can spread quickly. (The more contagious B117 variant accounts for about 80% of cases in Israel now.) Some mask. Others don’t. The New York Times offers a compelling interactive account of the COVID situation in some Haredim communities: “‘How Many Funerals Will Come Out of This One?’” https://www.nytimes.com/interactive/2021/02/17/world/middleeast/israel-orthodox-jews-haredim.html.

Another challenge looms as Israel works its way through the “low-hanging fruit” of the willing and eager to contend with vaccine hesitancy among some other groups. Daily vaccinations dropped at one point recently from a high of 127,000 a day to 106,000 a day. The Health Ministry has countered online misinformation with a public education campaign to encourage people to get their shots. (“As vaccinations lag, Israel combats online misinformation,” https://apnews.com/article/israel-misinformation-coronavirus-pandemic-local-governments-museums-462b98e0ff0d7d5bf4400c84a61047b2)

The pace of vaccinations has picked up again this week, according to Health Minister Yuli Edelstein, who reported on Tuesday that 156,000 were vaccinated on Monday. At this point more than four million Israelis have now received at least a first dose of vaccine, while more than 2,612,000 have received both doses. Israel ties vaccination to greater personal freedom, providing an incentive, as Edelstein explains:

“Anyone who does not get vaccinated will be left behind. Yesterday the coronavirus cabinet confirmed the position of the Health Ministry that only the vaccinated and those who have recovered [from the virus] can enjoy gyms and leisure events. Go get vaccinated!” (“With vaccination rates rising again, Israel set to pass 4 million first doses,” https://www.timesofisrael.com/with-vaccination-rates-rising-again-israel-set-to-pass-4-million-first-doses/)

Vaccine results in the older, more vulnerable adults that Israel has prioritized differ to a degree from results in a vaccine trial populated with younger volunteers. Older adults’ bodies mount a weaker and somewhat delayed immune response after vaccination, so a reduction in cases actually occurred about three weeks into Israel’s vaccination campaign rather than two (“Israeli Vaccine Campaign Took Three Weeks to Curb Spread,” https://www.bloomberg.com/news/articles/2021-02-05/israel-s-pioneering-covid-vaccination-program-offers-key-lessons).

Still, among previously vulnerable, now-vaccinated Israelis, the Pfizer vaccine is currently delivering excellent results (“It works: 0 deaths, only 4 severe cases among 523,000 fully vaccinated Israelis,” https://www.timesofisrael.com/hmo-sees-only-544-covid-infections-among-523000-fully-vaccinated-israelis/). Vaccinated Israelis have proved 94% less likely to develop a symptomatic infection and 92% less likely to develop a serious case (“Symptomatic Covid-19 Cases Dropped 94% With Pfizer Vaccine, Israeli Data Show,” https://www.wsj.com/articles/israeli-data-shows-94-drop-in-symptomatic-covid-19-cases-with-pfizer-vaccine-11613401510). That’s good news in Israel, and that’s good news for other countries and their economies as sleeves are rolled up and jabs happen.

Let’s get to a conclusion.

In the US the COVID panic bottom was hit on March 23, 2020. Stocks have been in a robust recovery since. The market has been discounting the application of scientific and medical technologies to address COVID. Similar patterns have happened worldwide. The range of recovery varies with the policies and application of vaccines and is determined by the public health systems in those countries.

Israel is a high-tech public health system and is an open and democratic society. In Israel, the realization was embraced quickly: If you want to solve the economic crisis from COVID, you have to solve the public health crisis first. Israel is working that problem both from the vaccine angle and the treatment angle. For instance, the Tel Aviv Sourasky Medical Center (Ichilov Hospital) has developed an anti-coronavirus drug that has thus far had quite promising results, turning serious cases around in a couple of days (“Netanyahu: Israeli COVID-19 cure ‘could change the fate of humanity,’” https://www.jns.org/netanyahu-israeli-covid-19-cure-could-change-the-fate-of-humanity/).

Readers can decide for themselves how other countries have done and specifically how they would rate the last year or so of the actions of the United States.

We will have more in future commentaries about the massive growth ahead in the technology sector that involves healthcare. For now, the US ETF portfolio remains overweight the healthcare sector. That includes medical devices, biotech, and pharma.

David R. Kotok
Chairman of the Board & Chief Investment Officer
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