Counsel on Markets, Capital & Commerce
Equity markets have been defying gravity for longer than most analysts are comfortable admitting. The question is no longer whether a correction is coming — it is whether those in charge of managing other people's money are prepared to tell the truth about it.
For three consecutive years, the consensus view on equity markets has been wrong in ways that have enriched the optimists and embarrassed those who read the fundamentals carefully. But fundamentals have a habit of reasserting themselves — usually at the moment of maximum inconvenience for those who ignored them.
The signals worth watching are not the ones filling financial news feeds. They are in the bond market, where the yield curve has been sending messages that equity investors have chosen not to receive. They are in the private credit sector, where approximately 40% of private credit borrowers now have negative free cash flow — a figure that has risen sharply from 25% in 2021 and which represents the kind of deterioration that precedes, rather than accompanies, a reckoning.
They are in ASIC's own enforcement posture. The regulator has secured a record $350 million in civil penalties in the second half of 2025 alone, doubled its investigations, and is filing court proceedings at a rate not seen in its history. Regulators do not escalate enforcement into a healthy market. They escalate because they can see what the market is not yet pricing.
The honest assessment is uncomfortable: Australian markets are operating on assumptions about interest rates, earnings growth, and regulatory tolerance that the evidence does not support. That is not a prediction of catastrophe. It is an observation that clarity — now, before the reckoning — is worth considerably more than the comfort of the consensus view.
Interest rate policy that responds to political pressure rather than economic data is not monetary policy. It is monetary theatre — and markets are beginning to price that distinction.
More articles coming soonSuccessive governments have treated housing as a political instrument rather than an economic one. The consequences for a generation of Australians are now undeniable.
More articles coming soonThe bond market has a longer memory and a shorter temper than the equity market. When it speaks, the prudent investor listens — regardless of what the commentariat is saying.
More articles coming soon"Markets are not irrational. They are simply honest in ways that governments and central banks find inconvenient."
Alan Jones QC — On Market Integrity