Moneybeat – Forecasting an end to COVID-19


MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Rough week on jobs. The latest figures a reversal of a months-long trend of declining new applications for jobless benefits and declining numbers on continuing unemployment. Those numbers—no surprise—given the new round of economic lockdown around the country, the jobs numbers reflecting precisely that: new applications for unemployment benefits spiked close to 20 percent week on week, continuing claims up for the first time since September—a 4 percent rise.

We’re talking now with financial analyst and adviser David Bahnsen. David, good morning.

DAVID BAHNSEN, GUEST: Good morning!

EICHER: We’ve emphasized this. These latest numbers, you’re convinced, do not point to an underlying economic problem, not a systemic issue, what we see in those jobs numbers. This is more a pandemic problem than an economic problem.

BAHNSEN: Yeah, in case you can’t tell, I’ve really taken a posture today and in recent weeks to even point out I think it’s one step further than that. You’re right it is not an economic problem, but I don’t even think it’s a pandemic problem. I think it’s a pandemic policy response problem.

EICHER: Let’s talk about vaccine news, though. Nine months from identifying this coronavirus and we’ve got vaccines. Can you talk a little about that, how that worked? It feels like I imagine V-J Day would feel, an imminent end to the hostilities. But it also feels like a vindication of the power of private enterprise, free enterprise. It’s amazing.

BAHNSEN: Well, it’s an amazing thing from start to finish and there’s more amazement in some of the details of it. I certainly think people should understand where Big Pharma and biotech deserve credit. They did not wake up in March and say, wow, February produced this coronavirus, let’s get to work. They had mRNA technology in the pipeline—and what I mean by that is messenger RNA, which is creating the protein spike to go create the immune response against COVID. That’s about as basic level science on this as I can do. But this messenger RNA, which both the Pfizer and Moderna vaccines utilize has been in the works for years. 

Moderna’s was on the shelf. It’s just that it was never intended to be used for something they didn’t know existed, but then they were able to immediately accelerate some incredible clinical trials.

I think Operation Warp Speed produced something that is so important for people to understand about risk in economics: There’s always a certain amount of money that a business or an entrepreneur will spend to generate a future profit, not knowing if it’s going to work out. 

But there’s a limit to that. They have to do risk-reward calculations and there’s some point at which they say I can’t spend more than this to get this

Once you know you have purchases lined up, which is what Warp Speed did. Once they came in and pre-committed, it altered the risk-reward calculation so that pharma could say, “OK, we could really go forward and spend gobbles of money” that would never have been spent otherwise, knowing that they had a backstop on production and on distribution. 

So, Operation Warp Speed is proving to be incredibly successful. The years and years of R&D is proving to be incredibly successful. And if anything comes out of all of this, I truly hope it will be a diminishment of the demonization of Big Pharma and biotech in our country, who their multi-year investment into R&D and innovation and intellectual capital has produced something that’s going to save hundreds of thousands if not millions of lives.

EICHER: You mentioned Operation Warp Speed. How much credit do you give President Trump and his administration?

BAHNSEN: Well, I always think that presidents get way too much credit and way too much blame for almost everything. 

Operation Warp Speed is certainly a very successful integration of multiple things: the logistical skills of the military and defense department, the fact that there are a lot of serious A-team players in government that are former veterans of the healthcare industry. I think we have great leadership at HHS. There’s things that I’m impressed with at FDA throughout this. 

There’s things I’m very down on, including the last three weeks. A couple days ago on Friday night they did finally give the clearance, but I believe that’s clearance that could have come two weeks sooner. Two weeks and four days sooner. I don’t think it needed the three weeks from the time we had the finality of the late-stage clinical trials. So, I still want to see FDA get a little quicker. 

But, you’re right. When you’re talking about nine months from point A to point Z, we probably don’t need to be complaining too much. And yet the government can always be quicker and more efficient. In this case, it’s one of the better examples of private sector performance integrating with government getting out of the way. And then where they were involved, doing things well to create a very favorable outcome.

EICHER: I’m already seeing some good reporting in the financial press on good decision-making, strong leadership in the c-suites: crazy deadlines, pushy CEOs. That’s what you need, bold leadership, investments in research and development as you noted and the profit motive.

BAHNSEN: Yeah, I mean, I think that the story of COVID and a lot of this activity in the c-suite of the companies to drive successful outcomes is a really wonderful reflection of the best part of corporate America. Leadership from the top, top-down accountability and setting a structure that demanded results and having to coordinate across an awful lot of departments and an awful lot of people. 

So, to me, the performance of these things—as we continue to study the results from various companies—is really fantastic. And yet it’s not just fantastic in the context of getting a vaccination cure for the coronavirus. It’s fascinating for us to understand better how efficient business can and should operate. 

It’s a reflection of the very best parts of the human spirit and the beauties of free enterprise. So I’m really, quite frankly, encouraged and I hope a lot of Americans will better understand out of this how we were able to perform and put what will very soon be an end to COVID-19.

EICHER: David Bahnsen, financial analyst and advisor. Thank you, David.

BAHNSEN: Thanks for having me, Nick.


(AP Photo/Mark Lennihan, File) In this Nov. 5, 2020 file photo, a sign for Wall Street is carved in the side of a building. 

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