COVID-19 continues to spread across Europe and is also re-emerging in the US. We have long been concerned that the spread of the virus could accelerate as the weather cools at the same time as the colder seasons place a greater burden on healthcare systems.
Respiratory viruses such as the common cold and flu soar in the winter. There are several reasons why: we spend more times indoors (where viruses are easier to spread), our immune systems weaken, and viruses are believed to survive longer in colder, dryer weather.
Hospitals therefore risked a double whammy from both rising COVID-19 cases as well as the usual intense pressures from seasonal flu.
However, the almost non-existent flu season in the southern hemisphere suggests we’ll have more hospital capacity than previously feared.
The Oceania and Temperate South America regions have their “winter” flu seasons between June-October. This is different from Europe, North America and China, which suffer from December to April.
Australia, New Zealand, Fiji and their regional neighbours all had minuscule flu seasons this year.
Flu cases were similarly low in Argentina, Chile, Uruguay, and Paraguay.
The numbers look too good to be true. Could it be a glitch? Has the database not been updated? Perhaps there was no testing for flu this year as people were too afraid to go to the doctor and medical staff had more important things to work on.
How could this be? Simple maths gives us the answer: the flu virus is far less infectious than COVID-19, so it takes less to defeat it.
The reproductive rate (R) of COVID-19 is estimated to be around 2.7. That is, every person infects 2.7 others. By contrast, the seasonal flu’s reproductive rate is 1.3.
To suppress COVID-19, we need to bring its reproductive rate to below 1, a fall of at least 63%. But to bring the flu’s reproductive rate below 1, we only need to cut transmission by at least 24%.
The UK government’s mantra of “hands, face, space” (wash hands, wear a mask, maintain a safe distance from others) has not been sufficient to contain COVID-19. But it seems sufficient to quell the winter flu virus.
This means we should have more hospital capacity than previously feared under a “double whammy” scenario of a second COVID-19 wave coinciding with the flu season.
It’s unclear what combination of social restrictions will ultimately be required to contain COVID-19, and there will inevitably be further economic pain. But at least we should have more slack in the system than previously presumed.
This, alongside continued progress towards a vaccine, is one reason we remain neutral on equities.