Race To Immunity To Beat Global COVID-19 Surge

Economic Blog Posted by lplresearch

Thursday, May 6, 2021

New Cases Surge

Even as an unprecedented global vaccine rollout is underway the daily number of new COVID-19 cases reported (measured by the 7-day moving average) recently passed 1.25 million for the first time. The number of daily global cases has escalated rapidly, from a trough of under 500,000 in mid-February, driven by a devastating second wave of infections in India as well as increases in several other developing economies.

“A successful domestic vaccination program has so far largely inoculated the US from participating in the most recent global wave of COVID-19 cases,” said LPL Financial Equity Strategist Jeffrey Buchbinder.  “Especially in developing economies local governments are racing to deliver vaccines before new variants can take hold.”

As shown in the LPL Chart of the Day, the number of new daily COVID-19 cases in India is 46% of the global total (up from just 5% in mid-March), but the US proportion is at its lowest level (6%) since the start of the pandemic.

View enlarged chart.

Relative to its population, the outbreak in India (population 1.37 billion) is smaller than the third wave in the United States that peaked in January. At that time, the U.S. was reporting 116 new COVID-19 cases per day per 10,000 people, and even though India’s rate has climbed rapidly it is still around 42 new cases per day per 10,000 people. However, India has suffered immensely from persistent underinvestment in its heath systems (spending just 3.6% of GDP on heathcare compared to 9% in Brazil and 17% in the US). Given current shortages of oxygen and hospital beds in India, we at LPL sincerely hope that this rate does not escalate further.

Race To Herd Immunity

Herd immunity against COVID-19 remains the ultimate aim of government vaccination programs. Different countries are due to reach this milestone at different stages due to differing speeds of vaccine rollouts. Herd immunity has been suggested by immunologists to be around 75% of the population vaccinated or with COVID-19 antibodies but estimates range from 65% to 90%.

As shown in the chart below, at its current rate of vaccinations, 75% of the U.S. population could be vaccinated within 4 months; but that may not be achievable based on the experience of Israel. Israel has fully vaccinated 58% of its population, which appears to be near a ceiling. The pace of vaccinations there has dropped to a level such that at the current rate it would take another 11 months to get to 75% vaccinated.

India and Japan are both seriously lagging on their vaccination programs. Based on current rates it would take around 3 years for each of those countries to fully vaccinate 75% of their populations. Globally just 3.7% of the population is fully vaccinated as many developing countries continue to struggle to access vaccines. To date, the wealthiest 27 countries have administered 36% of vaccines but only have 10% of the world’s population.

View enlarged chart.

This immunity data does not include people who have COVID-19 antibodies after recovering from the virus, estimated by the American Red Cross based on blood donations to be over 20% of the U.S. population. As such, to get to a combined immunity level of 75% around 55% of Americans would need to be vaccinated (slightly less than vaccination rate that Isreal has achieved).

While new vaccine-resistant variants remain a risk, countries that have been successful in the deployment of COVID-19 vaccines could see more of a tailwind for their economies and markets. We still favor domestic equities over developed international equities, but the gap is narrowing. The COVID-19 situation in emerging market economies is mixed, with India and parts of Latin America struggling, but we expect economic growth across Asia and attractive valuations to provide support for investments in these regions.


This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index and market data from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).

Insurance products are offered through LPL or its licensed affiliates.  To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.

  • Not Insured by FDIC/NCUA or Any Other Government Agency
  • Not Bank/Credit Union Guaranteed
  • Not Bank/Credit Union Deposits or Obligations
  • May Lose Value
View All Posts