December 18, 2025 • 10 mins
Markets aren’t always rational, and neither is the commentary around them. Diana Mousina, Deputy Chief Economist at AMP, talks to Sean Aylmer about the five lessons she learnt this year, including the growing market impact of politics, how to read Trump’s trade agenda, why gold and tech defied the textbook, why Fed “speak” can be noise, and why inflation can stay sticky, even when everyone expects it to fade.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to Fear and Greed Q and A, where we
ask and answer questions about business, investing, economics, politics and more.
I'm Sean Aylmer. My guest today is Diana Messine, a
deputy chief economist at AMP Deana. Welcome back to Fear
and Greed.
Speaker 2 (00:18):
Hey Sean, good to be back.
Speaker 1 (00:20):
You've written an article that sums up the last twelve
months very very well. The top five lessons you've learned
over the past twelve months or so, let's kick it
off number one. According to Diana Messina, Politics Matters explain that.
Speaker 3 (00:36):
I'm feeling like politics is causing an ever increasing impact
to share markets and to the economy in the last
few years, and I think it really kickstarted with COVID.
In the years prior to COVID was sort of most
Western colomies were sort of desperate for more fiscal stimulus
or even if you're going to put another way, some
(00:57):
sort of government intervention because growth was just too low
and inflation was quite poor as well, and wages growth
wasn't really going anywhere in Australia but also in the US.
And then since COVID, we've had this massive kick to
government spending consumption and investment in Australia, but actually also
it's happened in most other Western countries. And I suppose
(01:21):
it's not just it's not just government spending, it's also
intervention in the economy through a variety of different means.
And in the US, the examples this year have been
the direct investment by the government into companies like Intel,
much closer relations with tech companies, or the President having
dinner with the tech bros or the most important tech
(01:44):
tech bros in the US, and obviously what's happened around
trade and tariffs.
Speaker 2 (01:51):
And markets have all moved on that.
Speaker 3 (01:53):
And as an economist, I think it's quite important that
we need to actually forecast what the government's going to
do to give us idea about what's going to happen
to growth and inflation in the next twelve months. I
personally don't remember spending this much time on things like
the midioeconomic outlook as I have this year in Australia,
or focusing as much on the budget or what the
Treasurer is saying. So I think it's just a sign
(02:16):
that markets are so much closer to what's happening in
the government sector.
Speaker 1 (02:21):
And is that both an influence and a fiscal thing.
So that spending twenty seven percent of GDP in the
next few years in Australia, that's relatively high government spending
if you exclude COVID, but the influence factor as well.
Speaker 3 (02:35):
Absolutely, it's it's both, and the influence, I guess, is
the harder one to gauge when you're thinking about what's
going to be the impact to markets or to the economy.
But you know, we try and read that the best
way that we can, and I think that just means
basically listening to everything that the Treasurer and the Prime
Minister is saying, you know, following all the program announcements
(02:57):
very closely. So basically just means having to follow what
the government is saying at a much closer rate compared
to ever before.
Speaker 1 (03:05):
Okay, less number two take Trump seriously, not literally.
Speaker 3 (03:10):
I don't remember where I saw this, but I did
make it up myself.
Speaker 1 (03:14):
Oh no, no, no, fantastic claim it absolutely claim.
Speaker 3 (03:18):
Well, I haven't seen it anywhere else again, so I
have been using it a lot, but it's I remember
reading it somewhere and it's really stuck with me, particularly
in this past twelve months. I mean, our view coming
into twenty twenty five was that there was going to
be a global trade war, but hopefully it wasn't going
to be a complete catastrophe. Yes, tariffs were going to
go up, but there would be some concessions made around that.
(03:40):
And I think that this sort of theme has played
out also through the Taco Trump always chickens out trade
and the ultimate sign that the US has made deals
with other countries and also impact things like the substitution effect,
basically meaning that tariffs haven't hit consumers is as much
(04:01):
as feared. So what's happened is although tariff rates in
the US were expected to rise from about three percent
to over twenty percent, as high as over thirty percent
at Liberation Day, effectively they've only risen to about eleven
or twelve percent at the moment from this substitution impact.
But also I think from a lot of the deals
that Trump has made, particularly deals on consumer goods that
(04:23):
the US cannot actually manufacture itself, because Trump knows that
consumers still have this cost of living concern front and
center mind. And that's why we've seen some Democrats do
better in some of the regional elections lately.
Speaker 1 (04:36):
Is that hard though, to take him seriously, but not
literally because if normally you do take presidents literally and
therefore you can make decisions around that. Now you're just
saying that's the direction he's going, but we're not quite
sure how severe it's going to be.
Speaker 3 (04:52):
Well, he speaks in hyperbolic terms, so in a lot
of commentary, not just around the economy, but you know,
in a lot of commentary around other regional leaders, other
global leaders, other people in the administration. It's all quite
inflammatory type of retric So I think that's just his
style of communication, and we just have to learn how
(05:13):
to play it from a market point of view.
Speaker 1 (05:16):
Okay, number three. In the short run, fundamentals don't always work.
I don't think you're allowed to say that as an economist. Yeah,
but anyway, go on.
Speaker 3 (05:24):
But we know, I mean, I can say that because
the share market is not rational and we sort of
you know, we I think we have spent years trying
to figure out is the US of a value?
Speaker 2 (05:34):
Know?
Speaker 3 (05:34):
How many times do do fund managers say the US
is of a value? It's going to be it's going
to be a bad year, or this year in particular,
it's been the tech market is so overvalued.
Speaker 2 (05:44):
Just look at the fundamentals.
Speaker 3 (05:45):
Compare the mag seven to Cisco back in the two thousands,
or what was going on in tech in the two thousands,
And we've sent a few examples of that this year.
Speaker 2 (05:54):
I mean, tech is one of the clear ones.
Speaker 3 (05:56):
The fundamentals around tech probably make you a little bit anxious,
and you probably wouldn't have wanted to be invested in
tech at the beginning of the year end. Although the
tech sector hasn't had a strong performance in twenty twenty five,
it's still been very good and it's expected that that
grows likely to continue to some extent in the next
few years. The other key example for me this year
was gold. The fundamentals around gold should have meant that
(06:19):
the rally was much less than the rally that we had.
Gold prices are up by about sixty four percent year
today after having a pretty good year double digit returns
last year, so the fundamentals around gold didn't really make
sense either. But we saw a lot of fomo coming
into the start of the gold rally, you know the
lines at the ABC Gold bullion store. So in the
(06:41):
short run, sometimes we can get investor exuberance FOMO playing
out more importantly than some of the fundamental analysis. And
I mean, for economists, there are so many examples where
the fundamentals don't always play out. I think that a
clear example of that this year for US has been
(07:01):
inflation forecasts. When we put our inflation forecast together, we
missed the increased prices in the last three to four
months in Australia. I mean, maybe we will find that
that was just a one off. I'm hoping that we do,
but you know, if we don't, again, it's another sign
that sometimes the fundamentals don't tell you these anomalies that
(07:21):
can just happen in an economy.
Speaker 1 (07:24):
Let's number four. I can't believe you're saying this. Don't
always listen to what central banks say.
Speaker 2 (07:31):
I know, I.
Speaker 3 (07:33):
Sort of worry that I'm not going to be on
the RBA Christmas card maybe when I said this, but
I sort of tried. I sort of tried to focus
more on the FED. We had so much FED speak
this year, in particular in the past few months, and
I think the Fed's a little bit different to the
RBA in a few ways, but the main one is
that basically all the members of the Federal Reserve speak
(07:55):
to the public, and whether that's the governors who are
actually voting on the Federal Open Markets Committee, or just
the regional FED presidents which are part of the committee
but may not be voting.
Speaker 2 (08:05):
In that year.
Speaker 3 (08:06):
We have so much retric coming from the Federal Reserve,
and there's a variety of different views at the moment.
I think because we're at this point in the cycle
where some people are weighing up the greater risks to
growth and the lad market, some people are weighing up
the higher risks to upside inflation, and we're seeing more uncertainty.
So if you listen to every single thing that a
(08:26):
FED member said, you wouldn't have been able to make
any money if you were trading off it, because the
market just bounced around.
Speaker 1 (08:33):
You'd be very confused. I think if you listen to
everything that the FED members said, I suggest do you
think that the Reserve Bank this year, it's the first
time we've had press conferences after interstrate decisions. Do you
think that's worked well?
Speaker 3 (08:46):
I think you know what I'm going to say here,
because I think I've said it before on fear and greed,
I personally think it's added to more confusion. And I
think the reason I say that is because it was
meant to provide us with more clarity, and I suppose
it has to some extent in that we know what
the Reserve Bank is focusing on, you know, we know
that they're really worried about the supply demand dynamics and
(09:07):
the economy. Then there was the new estimates on productivity growth,
so I guess we've got a bit more clarity on that,
although that was published in their statement on Montreal policy too.
But for me, the confusion has been sometimes in the
tone of the post meaning statement versus the press conference
versus the minutes. I have found that there's been a
change of tone, and that to.
Speaker 2 (09:24):
Me is confusing.
Speaker 1 (09:26):
Okay, the fifth one, High inflation hurts for years.
Speaker 2 (09:30):
Someone said to me the other day what hurts more,
high inflation or heartbreak? And I actually picked inflation, and.
Speaker 1 (09:36):
Then I thought it a little bit more.
Speaker 3 (09:39):
And I'm such a geek. This was meant to be
I sort of again. You know the fact that we've
missed the uptick in inflation in the past few months
in Australia a sign that sometimes services prices can remain
sticky for a long time, and we had been hoping
for a softer pace of inflation this year. We were
(09:59):
sort of right on that in the first six months
of the year, but then we continue to have this
tick up in services prices, and I think also the
fact that sometimes you have these parts of goods inflation
that can seek through into services and just stay there
for years. And obviously cost of living is still a
major concern for people because we've had this huge level
change to prices.
Speaker 1 (10:19):
Deanna, thanks for talking to fear and greed.
Speaker 2 (10:21):
Thanks so much, John.
Speaker 1 (10:22):
As Diana Messina, Deputy chief economist at AMP. I'm Sean Almer,
and this is fear and greed, a Q and a
Welcome to Fear and Greed Q and A, where we
ask and answer questions about business, investing, economics, politics and more.
I'm Sean Aylmer. My guest today is Diana Messine, a
deputy chief economist at AMP Deana. Welcome back to Fear
and Greed.
Speaker 2 (00:18):
Hey Sean, good to be back.
Speaker 1 (00:20):
You've written an article that sums up the last twelve
months very very well. The top five lessons you've learned
over the past twelve months or so, let's kick it
off number one. According to Diana Messina, Politics Matters explain that.
Speaker 3 (00:36):
I'm feeling like politics is causing an ever increasing impact
to share markets and to the economy in the last
few years, and I think it really kickstarted with COVID.
In the years prior to COVID was sort of most
Western colomies were sort of desperate for more fiscal stimulus
or even if you're going to put another way, some
(00:57):
sort of government intervention because growth was just too low
and inflation was quite poor as well, and wages growth
wasn't really going anywhere in Australia but also in the US.
And then since COVID, we've had this massive kick to
government spending consumption and investment in Australia, but actually also
it's happened in most other Western countries. And I suppose
(01:21):
it's not just it's not just government spending, it's also
intervention in the economy through a variety of different means.
And in the US, the examples this year have been
the direct investment by the government into companies like Intel,
much closer relations with tech companies, or the President having
dinner with the tech bros or the most important tech
(01:44):
tech bros in the US, and obviously what's happened around
trade and tariffs.
Speaker 2 (01:51):
And markets have all moved on that.
Speaker 3 (01:53):
And as an economist, I think it's quite important that
we need to actually forecast what the government's going to
do to give us idea about what's going to happen
to growth and inflation in the next twelve months. I
personally don't remember spending this much time on things like
the midioeconomic outlook as I have this year in Australia,
or focusing as much on the budget or what the
Treasurer is saying. So I think it's just a sign
(02:16):
that markets are so much closer to what's happening in
the government sector.
Speaker 1 (02:21):
And is that both an influence and a fiscal thing.
So that spending twenty seven percent of GDP in the
next few years in Australia, that's relatively high government spending
if you exclude COVID, but the influence factor as well.
Speaker 3 (02:35):
Absolutely, it's it's both, and the influence, I guess, is
the harder one to gauge when you're thinking about what's
going to be the impact to markets or to the economy.
But you know, we try and read that the best
way that we can, and I think that just means
basically listening to everything that the Treasurer and the Prime
Minister is saying, you know, following all the program announcements
(02:57):
very closely. So basically just means having to follow what
the government is saying at a much closer rate compared
to ever before.
Speaker 1 (03:05):
Okay, less number two take Trump seriously, not literally.
Speaker 3 (03:10):
I don't remember where I saw this, but I did
make it up myself.
Speaker 1 (03:14):
Oh no, no, no, fantastic claim it absolutely claim.
Speaker 3 (03:18):
Well, I haven't seen it anywhere else again, so I
have been using it a lot, but it's I remember
reading it somewhere and it's really stuck with me, particularly
in this past twelve months. I mean, our view coming
into twenty twenty five was that there was going to
be a global trade war, but hopefully it wasn't going
to be a complete catastrophe. Yes, tariffs were going to
go up, but there would be some concessions made around that.
(03:40):
And I think that this sort of theme has played
out also through the Taco Trump always chickens out trade
and the ultimate sign that the US has made deals
with other countries and also impact things like the substitution effect,
basically meaning that tariffs haven't hit consumers is as much
(04:01):
as feared. So what's happened is although tariff rates in
the US were expected to rise from about three percent
to over twenty percent, as high as over thirty percent
at Liberation Day, effectively they've only risen to about eleven
or twelve percent at the moment from this substitution impact.
But also I think from a lot of the deals
that Trump has made, particularly deals on consumer goods that
(04:23):
the US cannot actually manufacture itself, because Trump knows that
consumers still have this cost of living concern front and
center mind. And that's why we've seen some Democrats do
better in some of the regional elections lately.
Speaker 1 (04:36):
Is that hard though, to take him seriously, but not
literally because if normally you do take presidents literally and
therefore you can make decisions around that. Now you're just
saying that's the direction he's going, but we're not quite
sure how severe it's going to be.
Speaker 3 (04:52):
Well, he speaks in hyperbolic terms, so in a lot
of commentary, not just around the economy, but you know,
in a lot of commentary around other regional leaders, other
global leaders, other people in the administration. It's all quite
inflammatory type of retric So I think that's just his
style of communication, and we just have to learn how
(05:13):
to play it from a market point of view.
Speaker 1 (05:16):
Okay, number three. In the short run, fundamentals don't always work.
I don't think you're allowed to say that as an economist. Yeah,
but anyway, go on.
Speaker 3 (05:24):
But we know, I mean, I can say that because
the share market is not rational and we sort of
you know, we I think we have spent years trying
to figure out is the US of a value?
Speaker 2 (05:34):
Know?
Speaker 3 (05:34):
How many times do do fund managers say the US
is of a value? It's going to be it's going
to be a bad year, or this year in particular,
it's been the tech market is so overvalued.
Speaker 2 (05:44):
Just look at the fundamentals.
Speaker 3 (05:45):
Compare the mag seven to Cisco back in the two thousands,
or what was going on in tech in the two thousands,
And we've sent a few examples of that this year.
Speaker 2 (05:54):
I mean, tech is one of the clear ones.
Speaker 3 (05:56):
The fundamentals around tech probably make you a little bit anxious,
and you probably wouldn't have wanted to be invested in
tech at the beginning of the year end. Although the
tech sector hasn't had a strong performance in twenty twenty five,
it's still been very good and it's expected that that
grows likely to continue to some extent in the next
few years. The other key example for me this year
was gold. The fundamentals around gold should have meant that
(06:19):
the rally was much less than the rally that we had.
Gold prices are up by about sixty four percent year
today after having a pretty good year double digit returns
last year, so the fundamentals around gold didn't really make
sense either. But we saw a lot of fomo coming
into the start of the gold rally, you know the
lines at the ABC Gold bullion store. So in the
(06:41):
short run, sometimes we can get investor exuberance FOMO playing
out more importantly than some of the fundamental analysis. And
I mean, for economists, there are so many examples where
the fundamentals don't always play out. I think that a
clear example of that this year for US has been
(07:01):
inflation forecasts. When we put our inflation forecast together, we
missed the increased prices in the last three to four
months in Australia. I mean, maybe we will find that
that was just a one off. I'm hoping that we do,
but you know, if we don't, again, it's another sign
that sometimes the fundamentals don't tell you these anomalies that
(07:21):
can just happen in an economy.
Speaker 1 (07:24):
Let's number four. I can't believe you're saying this. Don't
always listen to what central banks say.
Speaker 2 (07:31):
I know, I.
Speaker 3 (07:33):
Sort of worry that I'm not going to be on
the RBA Christmas card maybe when I said this, but
I sort of tried. I sort of tried to focus
more on the FED. We had so much FED speak
this year, in particular in the past few months, and
I think the Fed's a little bit different to the
RBA in a few ways, but the main one is
that basically all the members of the Federal Reserve speak
(07:55):
to the public, and whether that's the governors who are
actually voting on the Federal Open Markets Committee, or just
the regional FED presidents which are part of the committee
but may not be voting.
Speaker 2 (08:05):
In that year.
Speaker 3 (08:06):
We have so much retric coming from the Federal Reserve,
and there's a variety of different views at the moment.
I think because we're at this point in the cycle
where some people are weighing up the greater risks to
growth and the lad market, some people are weighing up
the higher risks to upside inflation, and we're seeing more uncertainty.
So if you listen to every single thing that a
(08:26):
FED member said, you wouldn't have been able to make
any money if you were trading off it, because the
market just bounced around.
Speaker 1 (08:33):
You'd be very confused. I think if you listen to
everything that the FED members said, I suggest do you
think that the Reserve Bank this year, it's the first
time we've had press conferences after interstrate decisions. Do you
think that's worked well?
Speaker 3 (08:46):
I think you know what I'm going to say here,
because I think I've said it before on fear and greed,
I personally think it's added to more confusion. And I
think the reason I say that is because it was
meant to provide us with more clarity, and I suppose
it has to some extent in that we know what
the Reserve Bank is focusing on, you know, we know
that they're really worried about the supply demand dynamics and
(09:07):
the economy. Then there was the new estimates on productivity growth,
so I guess we've got a bit more clarity on that,
although that was published in their statement on Montreal policy too.
But for me, the confusion has been sometimes in the
tone of the post meaning statement versus the press conference
versus the minutes. I have found that there's been a
change of tone, and that to.
Speaker 2 (09:24):
Me is confusing.
Speaker 1 (09:26):
Okay, the fifth one, High inflation hurts for years.
Speaker 2 (09:30):
Someone said to me the other day what hurts more,
high inflation or heartbreak? And I actually picked inflation, and.
Speaker 1 (09:36):
Then I thought it a little bit more.
Speaker 3 (09:39):
And I'm such a geek. This was meant to be
I sort of again. You know the fact that we've
missed the uptick in inflation in the past few months
in Australia a sign that sometimes services prices can remain
sticky for a long time, and we had been hoping
for a softer pace of inflation this year. We were
(09:59):
sort of right on that in the first six months
of the year, but then we continue to have this
tick up in services prices, and I think also the
fact that sometimes you have these parts of goods inflation
that can seek through into services and just stay there
for years. And obviously cost of living is still a
major concern for people because we've had this huge level
change to prices.
Speaker 1 (10:19):
Deanna, thanks for talking to fear and greed.
Speaker 2 (10:21):
Thanks so much, John.
Speaker 1 (10:22):
As Diana Messina, Deputy chief economist at AMP. I'm Sean Almer,
and this is fear and greed, a Q and a
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