Covid infections reaching climax but vaccines looking too late to save Japan Olympics or its PM

Covid infections and fatalities look to be reaching climax
As Covid deaths have reached yet another grim milestone of 2mn worldwide and with fatalities in the US approaching 400K, markets are hoping for a prompt and more organised response to tackle the pandemic by the incoming US administration. With Mr Biden promising to immediately sign a series of executive orders, including imposing a 100-day mask mandate and injecting funds at state levels to speed up vaccination programs, he looks to have his hands full from the very start as he will also be looking to push through the senate an additional $1.9trn of fiscal stimulus to keep the economy from sinking again. 

Although the challenges are daunting, especially as Mr. Trump has ignited more fires on his way out, all part of his scorched earth tactic which could yet result in an armed conflict with his supporters on the inauguration day, we think we are reaching the final climax of dark days that have spilt over from 2020 as the resulting surge in infections from December’s holiday gatherings is now coming to pass while the recent movement restrictions should start to slow the contagion. In the meantime, news of the interim trial results from the one jab, Johnson & Johnson vaccine which has shown very high efficacy levels and one which does not require ultra-low temperature storage was highly promising that more prevention drugs are coming this quarter. 

To be sure, the more contagious Covid variants, especially the latest discovered in Brazil remain a major cause for concern. However, existing vaccines are thought to still remain effective on most while according to mRNA specialists, reprogramming the jabs to directly address the prevalent genome mutations will take only days to achieve and less than six weeks to bring on to the market. Although news that Pfizer will be temporarily cutting deliveries of its Covid shots to EU met with some negative reactions, plans to reconfigure its manufacturing sites within four weeks to boost its annual capacity from 1.3bn to 2bn is indeed another positive as production of other vaccines are ramped up. With global daily shots now reaching 2.5mn doses a day from 850K posted in the previous week, vaccination programs are starting to drastically improve. 

Japan Olympics in grave doubt while Suga’s days look numbered
We find ourselves making the same predictions as we did in February of last year that the Olympics will be cancelled and Japan’s prime minister at the time will be out of a job before year-end. Neither of these two predictions looked obvious at the time. Japan PM, Shinzo Abe was simply in a state of denial that Covid was going to upstage the summer games which was going to be his leaving trophy, and his response to the pandemic proved as anaemic as those of his friend in the White House. 

This time round, we believe the evidence backing our calls are far stronger as Covid infections in Japan are now raging. One issue which we addressed numerously last year in our scathing attacks on the Abe government was that without adequate testing, there really is no way to know how many are infected. Nearly twelve months on, testing remains woefully inadequate and remain mostly confined to hospitals. In fact, since the start of 2020, total tests conducted in Japan have not surpassed 5.8mn which given the nation’s vulnerable ageing demographics with population of over 126mn, it is simply inexcusable, especially given the country’s financial and medical resources. Moreover, vaccines look unlikely to be approved until February and knowing Japan’s bureaucratic system, we suspect administering the jabs will prove painfully slow. 

Indeed, the current PM, Yoshihide Suga who replaced Abe in September, looks to be equally incompetent as number of infections have climbed steeply in the past few months while his popularity in the recent polls have plunged to new lows of just above 30% level. Not only he has encouraged more support for the Go-To travel campaign inherited from his predecessor to stimulate domestic tourism (which some argue has only helped spread the virus) but he has resisted calling for a nationwide state of emergency. He too is as adamant as Abe was that the Olympics will go ahead as planned. However, with the Lower House election due in October and staging the games now hugely unpopular, we not only think Olympics will be cancelled by March, and this time for good, but Suga’s days as Japan PM looks to be coming to an abrupt end.