Markets have latched onto slivers of positive news about booster protection and Omicron producing less severe outcomes.
But the supporting data is thin and/or premature, while the data on the speed of infections and reduced protection from vaccines and previous infections is more robust.
So we think markets are not discounting the potential for economic disruption from Omicron nearly enough.
We keep a particular keen eye on China where, given the speed at which Omicron spread, its zero-tolerance COVID policy seems difficult to maintain.
Given China’s role as the manufacturing hub for the world, economic disruption here will have a ripple effect everywhere.
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