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Liam Dann: The heavy metal light at the end of the Covid tunnel

The pandemic will be over by this time next year – 80s rockers Guns N’ Roses have called it.

The dust has barely settled on the Covid-19 vaccine news and Guns N’ Roses have announced they’re bringing their enormous stadium show to New Zealand in November 2021.

In fact, they are coming to Dunedin’s Forsyth Barr stadium as part of a six-show Australasian tour.

This is the first new stadium tour of this scale that’s been scheduled anywhere since the pandemic took hold.

So it is very good news.

Not because we desperately need to see the Gunners back in action – again.

I’m sure it will be a great show but I won’t be going.

I saw them in Auckland back in 1993 when they were still young and angry and I don’t want to ruin the memory.

They were pretty terrible actually. They were late on stage, the sound mix was bad, the crowd barriers created a dangerous crush and they didn’t play for long.

But it didn’t matter because I had hitched a ride up from Christchurch in a truck, we drove right through the night and it was all very rock n roll.

My point here, other than to indulge in nostalgia for my mis-spent youth, is that the whole premise of this tour is based on being able to see a light at the end of the Covid tunnel.

I’m not saying Axl Rose or Slash know what’s going on.

But this tour is big business and there are clearly people involved with a lot of money riding on the specific timing of this recovery.

And they are doing their research and making calls like this one.

For all the imperfections, this is where market forces can provide some good insights.

Serious professional investors are pragmatic when it comes to the assessment of odds.

If they are successful they don’t let emotions like hope or fear guide them. And they read the science.

That’s been evident in the attitude of investment firms to the vaccine development process.

I do a regular video show with Mike Taylor, chief executive of local investment firm Pie Funds. For months he has been unshakable in his confidence that a viable vaccine was not far off.

And he has been right.

That wasn’t wishful thinking on his part. He has analysts who follow the science.

So do all the big investment firms.

That confidence in the science has been reflected in the stock markets.

Meanwhile, most of the rest of us haven’t dared to dream of being that optimistic for fear of disappointment.

Even now there is a decided lack of public jubilation about the vaccine news.

People are quicker to start grumbling about the difficulties of scaling up production and the logistic problems of distribution – even those these are much more mundane feats of human endeavour.

Meanwhile, normally glum economists like Nobel Prize winning Paul Krugman are very upbeat.

Krugman has started talking about a V-shaped recovery in 2021.

There are a multitude of caveats to be added about the next few months being extremely difficult – particularly in virus-ravaged regions like the US, UK and Europe.

The dire predicament these places are currently in seems an entirely reasonable dampener to any vaccine jubilation.

It is too soon for a “war is over” moment.

But that won’t stop investors and smart business people looking ahead with confidence.

It is deeply heartening that even as the economic data drifts further into negative territory in 2021, there will likely be a sense of hope and progress – the crisis will finally have a horizon.

Paradoxically, the end of the pandemic may actually be bad news for equity markets as an exuberant economic recovery could ultimately lift interest rates.

That’s probably the one thing that could actually cause a serious market correction.

If that comes with a surge of inflationary economic activity as the world celebrates, then it won’t be such a bad thing. We’ll cope.

As for the timing of big rock and roll tours, well who knows if Guns N’ Roses have got it exactly right.

But their plans, perhaps not coincidentally, fit quite nicely with assumptions that economists at Westpac are now making about our borders in 2021.

“We are now assuming that visitors from Australia will only be allowed entry into the country from mid-2021 onwards,” writes Westpac chief economist Dominick Stephens in his latest Economic Overview.

“Even then, the numbers arriving are likely to start off small, building gradually as restrictions are lifted on a state-by-state basis.”

The way Stephens phrases it makes it sound disappointing. But I think this would be a pretty great result.

“For other countries, we now assume that New Zealand will gradually loosen border restrictions from September 2021, starting with countries that are relatively
free of Covid-19.

“We expect that visitor arrival numbers will start off small, gradually lifting as a vaccine becomes more widely available and confidence begins to return.”

So sure, it’s going to be a gradual process of reopening and … (apologies in advance for this next bit) … nobody is predicting we’re headed straight to paradise city.

Maybe in 12 months, fans will be left standing in the cold November rain.

But I reckon all we need is just a little patience.

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