Markets Happy Hour Podcast - September 25, 2025: Bottlenecks, Bailouts and Breakthroughs

In today’s Markets Happy Hour Podcast, we dissect a busy week of news flow including a show down at the UN, growing tensions on the geopolitical front, growing indicators of economic strength and the continuation of the AI big-spending era. We are delighted to be joined by John Normand - Head of Investment Strategy for Australian Super. John's long history in investment strategy and asset allocation gives him a unique way of constructing a narrative with a smooth story arc.

We start our discussion by asking whether the economy in the US is actually better than we think - citing the upward revision in GDP to 3.8% for the second quarter, the fact that the weak employment numbers may have been distorted by an immigration clampdown leading to a worker shortage, and other signs that tariff revenue will boost the US coffers with little impact on inflation. These indicators - if true - would point to a slower rate lowering cycle than previously estimated.

We move then to discuss equity market breadth, and how it is improving, which John relates to this point in the growth cycle. We contrast this with some of the signs from fixed income markets, which seem to suggest that we are late cycle (tight spreads). We end with a discussion of the portfolio implications of the current rotations, and casts our minds forward to an asset class mix with a backdrop of lower rates. This would be positive for infrastructure and other asset classes such as private equity. John discusses his view that private equity and public equity valuations will start to converge in 1-2 years, aided by lower rates on the one hand and a dampening of the current AI euphoria driving public equity markets on the other.

This is a fascinating and timely discussion which contains much food for thought.