Introduces topic: Block (formerly Square) stock up after CEO Jack Dorsey announces 40% layoffs due to AI efficiencies.
Joe
Gary Cohn
Companies are being forced to run more efficiently. Headcounts bloated after COVID as productivity fell. Now in a normalized environment with AI, and the main KPI companies use to show AI adoption is headcount reduction.
Recalls Cohn's past explanation that companies facing margin pressure from tariffs respond by not hiring.
Joe
Gary Cohn
Affirms that trend is continuing. Companies have faced a shift from zero interest rates to ~5.5%, trade wars, higher input costs, and a declining dollar.
Notes President Trump highlighted underappreciated economic strengths, and references Mike Wilson's view that the stock market anticipates future activity, then money flows out to fund it.
Joe
Gary Cohn
States he is fairly optimistic due to strong tailwinds. The Build Back Better bill's retroactive tax changes (higher SALT deductions) are resulting in larger tax refunds, putting more money in consumers' pockets.
Asks if the recent market sell-off (Dow down ~450, NVDA unable to lift tech) is normal backing and filling or something more.
Joe
Gary Cohn
We are having a bit of a rotation. The market-cap-weighted S&P (driven by mega-caps like NVDA) is flat this year, but the equal-weighted S&P is up about 6%.