Eighth weekly Sunday off-the-record chat with experts

10 May 2020

Each Sunday, a friend organises a two-hour call for friends (many of whom are senior figures from finance, industry, and academia) to hear 10-15 experts talk about the COVID-19 crisis. This has now grown to 500-1,000+ attendees, with a consistently all-star cast of speakers drawn from many different fields.

Tonight’s installment, the eighth in as many weeks, covered wide ground, albeit largely focused on the US.

As with past conversations, it was held under the Chatham House Rule, meaning I can share a summary of the content but not the names of the participants. I have removed obviously identifying details as well. As with each of these, the notes are as near-verbatim as I can make them, and almost real-time (apologies for typos).

I had to drop off the call before the final speaker and the Q&A, so omit those notes.

In the summary below, note that questions listed at the start of each section were pre-submitted by organizer to the speakers; not all were answered.  Questions inline were asked live.

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Topic:  Vaccines

Bio:    Physician and scientist involved with vaccines; professor.

1.      What types of vaccines are most promising for Covid19?

2.      What is the timing?

3.      Will we have to make a bet on safety and/or efficacy before taking the vaccine?

4.      Should we take shortcuts given the risks from the pandemic?

5.      Do you think the first vaccine will have short-term immunity and we will need to take a second vaccine when available?

6.      Who should take the vaccine, the vulnerable and/or the young but not vulnerable to get herd immunity?

7.   Do you believe that individuals with Covid19 antibodies will be immune from getting sick again, and if you don’t know, then why would a vaccine work if it creates similar antibodies?

• Don’t yet have a safe, effective, scalable vaccine.  
• Three broad areas being pursued in Precission Vaccines programme
  • 1. Observational study of 1-2K adult americans with COVID-19, being followed in and after hospitalization for up to a year.  Clinical information including background, but also obtaining bio samples at up to 10 time points over the year. Integrate with clinical data / outcomes.  Learn about how the immune system integrates with the virus.  10 centres across US participating.
  • 2. How to scale vaccine once we have one.
  • 3. Repurpose an old vaccine that may cross-protect.  It’s BCG, a tuberculosis vaccine that is more than 100 years old.
• Q: We’re heard that viral load matters — implications for vaccine?
  • There’s an equation that says that the severity of the disease relates to the strain, the amount of exposure, and (inversely) the resistance.
  • So yes, the more you’re exposed to, the worse.
  • Elderly immune system is different and weaker.  We will need vaccine that works for them.
  • We see this with flu, where it doesn’t always work for the elderly.
  • For some infections, like dengue, a vaccine can make the disease worse!  
• Q: We’ve been working on vaccine for HIV for 30 years and don’t have a vaccine.  IS that a risk here?
  • It’s a risk but HIV is a much harder virus.  I’m optimistic that we will have one or more.  We may get unlucky and discover that the first few don’t scale; aren’t safe in large populations.  
  • So good that we will have multiple shots on goal.

Topic:  Managing a Contemporary Art Museum during a pandemic

Bio: Director of a major contemporary art musem.

1. Who is your new audience?
2. If you have a different audience will you adjust your choice of artist, content, subject matter, or method of presentation?
3. Can you have blockbuster shows with large audiences, or do you have to severely limit attendance?
4. Your revenues will fall with attendance and your giving will be down, so how will you adjust your expenses?

• Museums are powerful economic force as well as being a cultural force.
• We welcome over 850M visitors/year in the US.
• Annual contribution of sector is $50B to GDP + $12B in taxes.
• Over 725K jobs in museums, more than double that of professional sports.
• Our museum, and most others, closed in mid-March.  For 9 weeks 3 principles:
  • Protect staff/public
  • Keep public engaged
  • Keep organization sustainable
• With move to reopening, we’re have two more:
  • Museum we closed is not the same one we will reopen on any dimension
    • Financial models will change — much lower earned revenue
    • Our attendance, usually 50% tourists, will be reduced and much more local
    • Our facilities will need to be a socially distant experience which is the opposite of what museums have gone for in the past.
  • Question our community will ask: what did you, the museum, do during the crisis to serve the community?
• Future of museums. Four outcomes:
  • 1. Online museum is here to stay.  Many museums established strong platform with stand-alone online offerings.
  • 2. Goodbye to blockbuster exhibitions. Had big financial advantage but they will not happen for a while — hard to gather loans, cost of insurance and transportation, lack of attendance.  It will mean greater focus on the collection.  Also blockbusters crowd out other stories. E.g., attention to emerging artist
  • 3. Museums “must double down on being gathering spaces”.  We gather people to experience art, so need new way of gathering.  Shown people can come together in the crisis.  We need to lock in that social fabric.  Job of museum is to push against things like xenophobia and racism, make belonging a core value.
  • 4. Revive the WPA model!  A hope rather than a prediction.  Artists have been hit hard.  Galleries are closed, museums are laying off freelancers.  Our industry is at Great Depression levels of unemployment.  New Deal is a template.  The WPA put 1,000 artists to work in 800 cities.  It kept artists employed but it also changed the course of art history — e.g., great photographers, artists like Rothko and Pollock.

Topic:  Will grit improve your odds of success with Covid19?

Bio: Professor of psychology, author.

1.       Does having Grit help me get through a crisis relatively unscathed?

2.       Can I work on improving my GRIT or am I born with it?

3.       Do you think a strong psychological makeup will have a difference when I catch the virus?

• No one comes out of this crisis the way we went in, but yes.
• Grit = passion and perseverance for long-term goals.  Perseverance is an asset; passion could be asset or liability.
• A new grit scale, not yet published:
  • 1. I’m doggedly persistent
  • 2. I never stop working to improve
  • 3. I’ve overcome setbacks to overcome an important challenge
  • 4. I overcome challenges more than the average
• All of these would help.  But the passion items:
  • 5. I’m working towards a very specific long-term goal
  • 6. I enjoy projects that take years to complete
  • 7. My interest in work borders on obsession
  • 8. Work essential to my identity
  • 9. Everything I see, hear or do relates back to my work.
• For really passionate people, this could be hard if you are prevented from doing your work.
• So what do you do with perseverance and passion?
• My advice: reflect on the ultimate purpose of your work, the top-level goal.  The trick is to be stubborn about that goal or purpose but to be flexible about how you achieve it.
• Can I improve grit?  Yes.  You’re born with it, but you can also improve it.  As a parent, challenge + unconditional support
• Does a strong psychological makeup help you if you get the virus?  I don’t know.  But we know something from related areas that psychological makeup can support physical health.
  • Grit is in the family of “conscientiousness” — like self-control, dependability, etc.  These are correlated with longer lives.
  • Gritty people tend to be optimists, look for the aspect of a situation they can change.  Optimists live longer than pessimists.  
  • Gritty people tend to be motivated by purpose and meeting rather than pursuit of pleasure.  This shows the same pattern as optimism in terms of lower incidence of all-cause mortality.

Topic:  When can we do elective surgery

Bio: Plastic surgeon, president of a regional society of plastic surgeons.

1. What should we expect for timing and extent of elective surgeries?
2. When/How will we get office based cosmetic treatments?

• All elective surgeries paused to focus on COVID-19
• Loss of $50B/year in the US related to elective surgeries.
• At least 2-month backlog of cases.
• Surgeons will list cases and they will be done in order of priority.
• When it restarts, you will be tested with antigen test before surgery.  If positive, you will be reported and asked to quarantine.  If negative, you will need to wait 4-6 weeks.
• Chinese study of 34 COVID-negative patients who required ICU case where a significant percentage died.
• Botox, fillers, laser treatment?
  • We don’t think testing is required for these.  
  • Some disagreement about lasers where some particles could become airborne.
  • Expect to wait outside in a car because of social distancing in waiting room.
  • Masks etc.
  • Some surgeries we won’t do if it requires removing masks.

Topic:  Staying Motivated Now

Bio: Professor of Marketing at a business school

1. Covid19 is disrupting retail, what will the future look like?
2. There is an ongoing disruption of education, especially college, what does this mean for the various institutions?
3. How we work will change:  Home, office, travel, transit to work, business meetings, distance between desks, etc.  Is this temporary?
4. Work is fun and interaction with peers is motivating.  How do we put the joy back in work?

• This is more of an accelerant than a change agent.  The future is happening faster.  
  • E.g, specialty stores going out of business, Amazon and Wal-mart consolidating power.  Huge stimulus for them!
  • Also seeing it in media.  
    • Ad supported media being killed — probably bankrupt with 70% decline in revenue.
    • Google and Facebook off in the short run but will have huge increase ,perhaps going from 60% to 70% share of ad spend as many marketers give up terrestrial and print.
  • Health care, which has grown prices faster than inflation and has low satisfaction, highly disruptible.  Somewhere between 90 and 90% of people who have gone through COVID-19 will never have gone through doctor’s office or hospital.  Will create surge of investment in tele-health and remote health care.
  • That will be second to disruption in education.  We say we’re public servants but we pray on the hopes and dreams of middle-class America, given a mediocre experience for $68K.  My students pay collectively $120K/night for school.  No one will pay this for Zoom calls.  This will create a huge gap year.  The better schools will dramatically scale, but the cartel of the education that consist of duopolies will be broken.  Several hundred universities will never reopen.
• Huge opportunity to create a service industry, to serve in the agency of others.
• Distancing, tracing, isolation is the key.  Need to dramatically expand the group of tracers, huge army.  Big opportunity to put human capital here.  Young people could do mandatory or voluntary conscription in this task.  “Coronacore”. Pay $25-30K/year, defer their tuition cost.
•  Variance.  Most of us are operating at 60-70% productivity. If you can be productive at home — “functional speed” = knowing when to accelerate or decelerate.  Opportunity to make huge relative progress against others if you can find out how to be productive at home.  
• Also huge opportunity to repair and rebuild relationships.  People are suffering emotionally and financially.  Can you demonstrate courage, love, and generosity to others?

Topic:  Covid19 Treatments:  Lessons learned from HIV

Bio: A leading HIV specialist, professor at a medical school, author of many articles.

1. Why did we need a cocktail to treat HIV?
2. Are cocktails generally required for deadly viruses?
3. The medical community is throwing the kitchen sink at Covid19, do you think a cocktail will be required to treat the virus?  Do you think the treatment will differ by patient, or by severity of sickness?
4. If you were to guess what the combination would look like in general terms, what would that cocktail look like?
5. Why was there no vaccine for HIV? 
6. There is a pill to prevent HIV, do you think this is a possible solution?
7. I assume you got to the cocktail by trial and error and by using controlled experiments.  We don’t have time, so how would we scientifically and statistically prove the worthiness of a cocktail?

• Similar in that accelerating science dramatically, setting aside some rules.
• HIV was much more difficult to transmit.
  • Also struck down younger people, often who were healthy.
• Covid symptoms appear quickly and death comes much more quickly, relative to HIV.
• Some of the ways we developed treatments can serve as template.
• Combination therapy worked much better for HIV than using one.  This led to the three-drug combination, “cocktail”.
• Lancet study discussed yesterday in NYT looked at treatment with triple-combination.  This combo worked better than one alone.
• Expect that we will need to develop other antivrals to get better results.
• In HIV we learned that prompt treatment led to better outcomes.  Not surprising — same with cancer and heart disease.
• Our only treatment (Remdesivir) requires treatment via IV.  This isn’t practical for early intervention.
• We did not succeed in developing HIV vaccine; but we can provide pre-exposure prophylactics.  

Topic:  Bad Science and Covid19

Bio: Head of  Research at a philanthropy organization.

1) Science is normally too slow: In normal times, science is often too slow, incremental, and highly individualistic

2) COVID science is different.  — Collaboration is happening in real-time on an international scale, top journals are publishing new work in a matter of days

3) Lots of bad studies still out there.  Examples: (A) early studies on hydroxychloroquine and remdesivir; (B) studies purporting to show that 10x-50x more people are infected, meaning the true death rate is much lower than we thought; (C) A recent WSJ op-ed claiming that lockdowns don’t work.

4) Rapid peer review weeds out the bad stuff more quickly than ever. Today, peer review is happening in real-time on Twitter rather than the typical secretive process. In real-time, you can see some of the world’s top scholars dissecting the latest paper, occasionally forcing a retraction or a thorough rewrite just by public scrutiny alone. 

• Overall, COVID science offers a model for all of science.
• Traditional science is too slow.  
• Better collaboration, open science.
• True, there have been some bad studies in the news.
  • Eg a paper in France, reported in the Economist, suggested that nicotine had beneficial effects.  Methodology was highly suspect.
  • WSJ late April opinion piece said lockdowns were not saving lives.  But made terrible errors in analysis.  Confused correlation and causation, ignored confounding variables.
  • Stanford study saying true fatality rate was same as flu.  Again made many methodological errors.  Group was not a random sample, selected for being interested in and at risk for COVID.  Also implausible — more people would have to be infected than exist in NYC.

Topic:  Pandemic and the EU

Bio:  Professor of International Economic Policy at major graduate school

1. Is Europe in a different position economically than the US to adapt to the challenges to the virus?
2. Americans are willing to make sacrifices and make wealth transfers for other Americans, are Europeans will to do that?
3. So far the damage to Spain and Italy has been different than Germany?  Will the Germans be willing to bail out the Spanish and the Italians?
4. There are fault lines in the Euro experiment, and the Europeans were unwilling to deal with it during the last crisis?  Will this economic debacle force the Europeans to fundamentally change the system to make it more robust to an economic shock?
5. Do you think the Euro experiment will fail and if so when?

Mody Answers

1. All economic forecasts are optimistic, especially so in Europe, and especially so in Italy.
2. Northern eurozone economies have the fiscal space for a sizeable stimulus, if just barely.
3. Southern states—Italy and Spain—do not. They need, between them, at least, 100-150 billion euros in grants.
4. For now, eurozone authorities are relying on the ECB to buy Italian/Spanish bonds
   1. Given Italy’s financing needs, by year end, the ECB will own over 40 percent of Italian bonds
   2. That is not stimulus, but will keep the balls in the air.
5. What then if the Italian government cannot service its debts? That will be Europe’s moment of truth.

• Believe it will be a slow recovery WW for many reasons
  • Will take time to control disease
  • Partial opening will create supply-linked problems..  Mismatch of buyers and sellers internationally
  • Uncertaintiy will cause further delays
  • Most importantly, we have vast amounts of debt and we will start seeing bankruptcies.
  • Europe is worse than the US on all of these.  
    • Near-recession prior to the crisis.
    • More tied to international trade
    • Debt levels are high
    • Banks are fragile
  • WIll be particularly slow in Itally
    • No growth for 20 years
    • Hit badly by COVID
    • Already in recession pre-crisis
    • Banks are the most fragile in Europe
    • Huge debt (135% of GDP).  Could go up to 180% or more.
  • In general, northern countries with fiscal room — Germany in particular
    • Even Germany is going through a structural change.  Car industry which has been fulcrum of growth for 50 years is going through wrenching transition.  NOt prepared for the next IT_based economy.
    • Plus  Deutsche Bank is airways on the edge.
    • Probably will do 10% of GDP stimulus, similar to US
  • Spain and Italy get almost no stimulus + big recession
  • EU is confederation of states.  Always a scramble for fiscal resources in such a situation.  E.g, NY after the revolution refused to pay for war debt, hoarded tariffs from inbound cargo.
  • Joint fiscal response is just talk.  A lot of ceremony but not action.
  • All of the action depends on European Central Bank. Can in principle print unlimited money and buy up IT and ES debt.
  • US central bank (Fed) is buying more than the net issuance of US treasury.
  • Bank of England says will buy as much debt as the UK gov’t issues.
  • Japan similarly.
  • ECB is not a normal central bank.  It is the CB of a confederation of states.
  • Holds 23% of Italian debt, going up quickly.  Will get to 45-50% of Italian debt.  Same thing will happen for Spain.
  • At that point the ECB will effectively own Italy.
  • What if Italy defaults on this debt?
• Germany supreme court says cannot buy debt of other countries, puts us (DE) on the hook.
• Next 6-12 months, Italians will either default to private investors, or to the ECB.
• When this happens, the question will be — WHat is the EU?  Will it be a confederation, or a federation?  Has never crossed that line before.  Only if we have a major miracle or a vaccine will we avoid that.

Topic: How will the furniture industry survive Covid19?

Bio:    Chairman and CEO of furniture company

1. Furniture showrooms are currently closed, how will they reopen?
2. Is there pent-up demand, or will demand be lower due to lower incomes and reduced home construction?
3. Will vendors be willing to go to tradeshows?
4. How will interaction within the trade change because of Covid19?
5. Do you think there will be any intermediate term problems related to the supply chain?
6. How will this impact interior design, the purchase of furniture, the relationship between the trade, and the interaction with the end consumer?

• Our buildings are showrooms for manufacturers and distributors.
• Even prior to COVID19 huge impact on our business from the 25% tarif on furniture coming from China — 75% of all wood products coming to the US come from China. Huge move of supply chain out of CHina. Hit profits..
• Most furniture retail shut down except for ecommerce.
• The new normal will be driven by the consumer.
• Dining room furniture has been only declining category.
• Generally optimistic that there will be more demand due to more home-centric lifestyle.

Topic:  Senior Housing and Covid19

Bio: Owner of many affordable senior properties

1. What changes have you made to your assisted living properties to protect the elderly residents?
2. What legal obligations do you have to the residents so that they protect themselves?
3. Residents are not prisoners, they can come and go from the property.  How do you protect the other residents from bad actors or bad luck?
4. You have limited common areas but there are still essentials like the laundry (mail room or (food) deliveries).  Will these common areas be the weak link and is there anything to do?
5. How have the economics of the facility changed, is rent being paid, will residents move out to support their kids, are families scared and want their mom with them, or is your facility the safest place for your residents?

• Company does affordable senior housing.  These are not nursing homes or assisted living facilities.  They are independent living apartments for low-income seniors.  While we don’t have a legal responsibility for their health and well being, we feel that we have a moral one.
• We had to close all gathering / social places that were non-essential.
• Heavy cleaning.
• Limiting visitors to essential visitors like care-givers
• Low income population, made sure they could get the groceries and pharma that they needed. 

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