Court Rules Against Musk in Legal Battle with Sam Altman, OpenAI 5/18/26

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**Kelly Evans** (1:00)
You're listening to The Exchange. Here's today's show.
Scott, thank you very much. And high rates are ruining the rally today. Although the Dow's trying to go positive, welcome to The Exchange. I'm Kelly Evans. Stocks are still mostly lower, especially the NASDAQ leading the declines down about three quarters of a percent. As keep an eye on the 10 year treasury yield there, it continues to rise. We're back up near 4.6 again today, just a hair below that level. These are the highest levels in about a year. And the semis are also under pressure with Micron leading the memory declines. NVIDIA down as well ahead of its earnings report on Wednesday. You can see NVIDIA Micron shares, I should say, down about 5 percent.
All of that said, tech has powered the S&P up 15 percent since the March lows. The equal weighted index up just 7 percent in that time frame. And our next guest says, that's a warning sign. Joining me in our opening exchange is Lizanne Saunders. She's the Chief Investment Strategist at Charles Schwab. I believe that's what you said, if I'm not mistaken, Lizanne. It's good to see you again.

**Lizanne Saunders** (2:02)
Good to see you too.
Yeah, Kelly, there is a little bit of halitosis with the move off the March lows that we have seen. Lots of ways to measure that, but it's still less than 10 percent of the S&P stocks are trading at 52-week highs, and it's less than 20 percent that are trading even at four-week highs. We have seen this narrowness and under the surface, a lot of really rapid fire rotations and churn under the surface. I think best-case scenario, that could persist at least in the near term.

**Kelly Evans** (2:33)
Right. Although it's interesting, once again, I mean, so many people say go with the equal weight, it's too top-heavy, but you continue to be rewarded for sticking with the market cap size that we have in front of us, right? I mean, is there any real reason to fade tech when it continues to put up the earnings growth to justify the size that is in the market and these valuations?

**Lizanne Saunders** (2:54)
Well, I think trying to take a timing approach where you say, okay, when is profit-taking going to kick in?
Just consider portfolio-based rebalancing strategy. So a lot of rebalancing that gets done, whether you're at the institutional level, the mutual fund complex, or even individual, tends to get done based on the calendar. You might do it quarterly, you might do it annually. But you can do portfolio-based rebalancing where, because of how rapid these rotations can be in the extremes, on the upside that we have seen in certain concentrated areas of the market, you force yourself to take some profits and add into areas where there has been commensurate weakness. I think that's the better way to stay in gear as opposed to try to time some point where you're going to get that inflection point.

**Kelly Evans** (3:40)
Let's talk about rates, what's going on there. Do you think this is the market testing Kevin Warsh?

**Lizanne Saunders** (3:46)
Well, either the bond market or the stock market, sometimes both, tends to test a new Fed share. It happened typically with the stock market. In the case of Janet Yellen, she wasn't tested so much by the stock market, but she was a bit by the bond market. And this one would have nailed it to the extent this continues with the actual day that he got confirmed as Fed share. But yeah, that is a common occurrence. And the bottom line is he has a different set of views on inflation, believes in trimmed mean measures of inflation. The rub there is that those have been rising as well. And he has the productivity argument associated with why short rates could go down. I'm not sure how quickly he's going to be singing that tune in the light of the fact that neither of the feds dual mandate is suggesting anything resembling rate cuts or easier monetary policy here. So I do think we are seeing a bit of that.