Episode summary
Putting Economic And Q3 Market Headlines Into Context For Clients, With James Liu
Financial Advisor Success (Kitces)
· · 31 min · Hosts: Michael Kitces · Guests: James Liu
Summary
James Liu argues that the market backdrop in 2026 looks fundamentally different from the post-2008 era, with bond yields near multi-decade highs, inflation driven more by energy than by broad demand pressure, and the Federal Reserve hiking cautiously rather than scrambling to catch up. He says that distinction matters for client conversations because the old “ultra-low rate” playbook no longer applies. High rates are pressuring bond prices, but they are also creating more income and restoring bonds’ defensive value if equities weaken.
On equities, James says strong corporate earnings are the main reason stocks have held up despite higher rates. He points to roughly 30% trailing earnings growth, a still-supportive forward outlook, and broader participation beyond the Magnificent 7, including energy and other sectors. He also frames the AI boom as more than a handful of speculative names: the real portfolio story is data-center buildout, infrastructure demand, and spillover benefits across the market.
For commodities and politics, James emphasizes context over reaction. He says commodities remain highly volatile even when they outperform, and he cautions against letting election headlines or national debt fears drive investment decisions. The core message for advisers is to stay focused on long-term goals and use these headlines to build confidence, not fear.
Key takeaways
- James Liu says the current rate environment is a reversal from the ultra-low-rate world after 2008, so advisers need a different playbook.
- He argues that today’s inflation pressure is being driven mainly by oil and energy, not the broad demand shock that defined 2022.
- James says equity gains are being supported by unusually strong earnings, with broadening sector participation beyond the Magnificent 7.
- He views AI as a long-term infrastructure theme, not just a trade in a few headline tech stocks.
- James says commodities can help diversify a portfolio, but their volatility makes timing them based on headlines risky.
- He warns advisers not to let elections or the national debt distract clients from long-term financial goals.
Notable quotes
“the playbook for dealing with an ultra low environment after 2008 is very different from what we're seeing today”
“So, today, whether you're talking about the 5-year yield, the 10-year, the 30-year Treasury, all of those yields are near 20-year highs”
“It's really to help clients focus on their long-term goals”
How the episode opens
The ultimate point for advisers when they work with their clients is that the playbook for dealing with an ultra low environment after 2008 is very different from what we're seeing today. Hello and welcome back to the Financial Advisor Technician podcast. I'm your host Adam Vanusen.
On today's episode, we're going to discuss the current market environment and how advisers can address common client concerns. Because while clients might be investing for the long term, it's hard for them to miss the latest financial headlines from rising bond yields and interest rates to elevated oil prices, which offers advisers the opportunity to demonstrate their expertise, build client confidence, and ultimately help clients stay on track to meet their investment goals by being prepared to address these questions and put the latest macroeconomic activity into context. To help us dig deeper into this topic, I'm joined today by James Louu, the founder and CEO of Advisor Data and Insights company Clearomics to discuss the key issues that drove market performance during the recently ended third quarter and what events could move the market in Q4.
So, welcome James and thanks for joining us here on the financial advisor technician podcast.
Adam, thanks for having me. — So, to start, a major issue this quarter was the continuing rise in bond yields. Perhaps you could start by putting the current state of bond yields into historical context and maybe discuss what this means for financial planning clients in practical terms.
Well, Adam, that's a great point on bond yields and what happened in the third quarter could really play out again in the fourth quarter. And so what we're seeing today for those advisers who may have seen headlines but haven't dug deep into it is a complete reversal of the rate environment that we've seen over the last 20 years.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- bond yields
- rate environment differences
- commodities returns
- ai market context
- client communication around elections and debt
Companies and tickers mentioned
- Clearnomics
Watch the episode
Watch “Putting Economic And Q3 Market Headlines Into Context For Clients, With James Liu” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Financial Advisor Success (Kitces), this episode and its artwork belong to Michael Kitces. Octagon is not affiliated with the show; this page is an independent summary.
