Subscribe
Share
Share
Embed
What else can I be doing to drive revenue? How do I optimize our go-to-market strategies to ensure effectiveness and ROI? If questions like these keep you up at night and occupy your thoughts by day, have we got a podcast for you.
Welcome to Market Mastery presented by The Bridge Group, the podcast where sales professionals learn to advance their careers. Join host and revenue expert Kyle Smith as he talks to elite B2B sales and revenue experts about the strategies they're using to win in the market.
From cultivating a killer company culture to navigating compensation questions, we'll provide you with the insights, education, and strategies you need to thrive.
For more from The Bridge Group, visit www.bridgegroupinc.com.
Matt Bertuzzi [00:00:00]:
I think everyone knows the Federal Reserve has raised interest rates since mid 2022. So as anyone who has ever seen a newspaper or read a Yahoo finance homepage, we want cuts. Everyone wants cuts. Cuts need to come. And I think the job opening is data say that, like, the tech market is strong, the job market is strong, but the Fed has their foot on the brake.
Kyle Smith [00:00:22]:
Welcome to Market Mastery, the podcast dedicated to uncovering revenue driving strategies for sales leaders in B2B tech. All right, today I am joined by Matt Bertuzzi, who is The Bridge Group's Head of Research and Operations. And we're going to talk through some recent JOLTS data and what it means for tech more broadly. So, Matt, what did we see from the latest JOLTS report that got released the beginning of September?
Matt Bertuzzi [00:00:48]:
Yeah, 4 September is the JOLTS report. The JOLTS BLS data on, basically hires, quits, layoffs, job openings. It looks back in time. So it's backwards looking through. This is September's release, which is for July 2024. So I think it's helpful to step back because you hear a lot about, like, what's the big Delta versus last month? But essentially, if you step back to 2018, the big thing that jumps out here is that big yellow bump is the layoffs. The COVID layoffs. But hires the blue line, you can see was absolutely ginormous.
Matt Bertuzzi [00:01:22]:
Just a huge run up in that post Covid time. Layoffs fell, and then they rebound a little bit. And green is quits. And quits rate is like a proxy for how good people who have jobs today, and this is tech, by the way. This is tech data. So this is going to be different than just total us data, how good people who have jobs in tech today feel their prospects are, because you're not quitting if times are lean. So this is the larger data. You can see it's noisy, but I really want to kind of like, zoom in to the last few years.
Matt Bertuzzi [00:01:49]:
So go from 2018 to 2021, 2024. So there's three periods, right? There was the post Covid boom. Hires were up, quits were way up, and layoffs were low. Then there was the mid 2022 to early 2023 layoff tech session moment. Obviously, hires fell. People aren't going to nominally, in theory, lay off and higher at the same time.
Kyle Smith [00:02:12]:
Hopefully not.
Matt Bertuzzi [00:02:13]:
Or hopefully quits fall off a map when your teams are being laid off, right, and there aren't as many job openings. And then there's now, which is like the treading water period. So if we just look at this, and these are three month moving averages are a little smoother. You can see that dotted line is the thing I care most about, the quits rate. And it is getting back to levels that one would say an optimistic labor market, or at least that people who have jobs today feel pretty confident in quitting their current jobs to take new ones.
Kyle Smith [00:02:42]:
So is it also an effect of there's so much noise stating that there's more layoffs to come? The market is so bad, we're heading towards a recession. So if you're a reasonable human being, you say, I'm not going anywhere. Right now, I have the greatest sense of stability that I could possibly have, which is being one year, two year, three years, tenured within my current employer. And so making a jump seems really scary because usually it's last one in, first one out, when if layoffs come around. And so essentially, if quits are spiking, it's an indication that people are saying, I'm not as scared about the likelihood that I'm going to get laid off two months after I take the new job as I was two years ago.
Matt Bertuzzi [00:03:27]:
Right. Like, this market has been really hard for the recently laid off. It's been anecdotally harder for people who don't have a job to find a job. There's been a completely different market for people who already have a job. I think that's what the quits data is speaking to. The people who have a job are finding new jobs.
Kyle Smith [00:03:41]:
Yep.
Matt Bertuzzi [00:03:42]:
So the next piece is job openings. Like, this is the real macro piece. Like, how many tech job openings are there? So, again, this is monthly data. And if you were to just, like, squint at this, you would say, okay, we're back into 2018. We rode a valley through 2020, and then an absolute boom through 2021, 2022, and then that layoff period in late 22 into early 23, and I went back into 2018. Job market, solid, solid job market.
Kyle Smith [00:04:11]:
So a little bit of a normalizing rode. The wave came crashing down, and now back to solid land.
Matt Bertuzzi [00:04:19]:
Yeah, absolutely. Yeah, seemingly. But, like, again, you don't often hear these numbers spoken about. You hear about, like, rates and how this compares to last month or last year. But if you, like, zoom out. This tech hiring market is nothing abnormal. We went through abnormal. Now we're back to normal.
Kyle Smith [00:04:35]:
Right?
Matt Bertuzzi [00:04:36]:
So this is what, Kyle, we were talking about earlier. Where do we go next? Right. I think everyone knows the Federal Reserve has raised interest rates since mid 2022 pretty substantially. So these are the actual rate jumps in the meetings. And you can see the big bars are 75 basis point or three quarter point raises. And there were four of them in a row, if memory serves, so just absolutely massive. Pumping the brakes from the Fed through that raise cycle. And then the last year we've been at that five and a quarter rate.
Matt Bertuzzi [00:05:13]:
Five and a quarter. Five and a half rate on the Fed funds rate. Straight through.
Kyle Smith [00:05:16]:
Yep.
Matt Bertuzzi [00:05:17]:
So as anyone who has ever seen a newspaper or read a Yahoo finance homepage, we want cuts. Everyone wants cuts. Cuts need to come. And I think the job openings data say that, like, the tech market is strong, the job market is strong, but the Fed has their foot on the brake.
Kyle Smith [00:05:34]:
They wanted to see the inflation reports come back showing sub 3% for some time period.
Matt Bertuzzi [00:05:41]:
Right. Core, median, super core.
Kyle Smith [00:05:43]:
Yeah. Seemingly that time period is over, based off of the statements made in Jackson Hole by Jerome Powell and from every, like you said, news article, which is not a true indication of what will likely happen. But the sentiment is, we're going to experience a rate cut September of 2024, likely 70% chance. Latest I saw, 70% chance that we will have a 0.25% rate cut on September 17 or 18th whenever the Fed meets.
Matt Bertuzzi [00:06:14]:
And then a quarter, a quarter percent. A quarter chance that we'll have 75 basis point or 50 basis points or 50.
Kyle Smith [00:06:21]:
Yeah, 50 basis points. So I think it's going to be low and slow. Seems like the more reasonable option. But what are we looking at here?
Matt Bertuzzi [00:06:28]:
So this is what's called the dot plot. Assume each dot is a person, a voting member's take on where will the Fed funds rate be over these different time periods. So you can see the median member of the Fed is saying, okay, by the end of 2024, we'll be in that five to five and a quarter range, which is not far off from where we are now. I mean, we're five and a quarter, five and a half now. So the market is way ahead of what the Fed has said on where they think they'll be at the end of December. But the clear trend is down. Right? It's like, down. It's down sharply.
Matt Bertuzzi [00:07:00]:
Yeah, this is saying. So we're going to see three. Some people think we'll be in the 2% range by 2026, which we haven't seen since mid 2022.
Kyle Smith [00:07:11]:
Yeah.
Matt Bertuzzi [00:07:12]:
So quick up. It's like where they say it's the elevator up and the stairs down or whatever.
Kyle Smith [00:07:17]:
Yeah. So raise quickly, inflation gets under control, drop slowly, wait and see what happens. And so really the question is, why does any of this matter to somebody who's working in tech and so the JOLTS data tells us we're essentially back to seemingly normal times. Things have calmed, it seems normal times. Two weeks before, there's bound to be some disruption in that where we're going to get a rate cut. And so the question becomes, what likely is going to happen with a 25 or 50 basis point rate cut, and then ultimately 3% at full percentage points over the next four years? Theoretically. So what is that actually going to mean?
Matt Bertuzzi [00:08:00]:
That's the question, right? Like if the Fed takes their foot off the brake, not the public markets. Like, what do companies do? And one would think, actually, we have some data here. This is actually probably something we're sharing. We have some data from Crunchbase. Thank you, Crunchbase. So these are venture dollars. So it's a dollar volume. This is venture dollars invested in their four different four buckets.
Matt Bertuzzi [00:08:22]:
That's what the color coding means. And you can see almost perfectly, as the Fed was raising venture dollar, volume was falling. And then the Fed hasn't even cut yet. Basically, as the Fed stopped raising venture dollar, volume increased. Like you can see, it's 35% year over year with no cuts. That's just with straight, stop jamming the brakes. Just keep your foot on the brake, don't slam it any harder. And already the venture market is moving up and to the right.
Kyle Smith [00:08:50]:
I had anticipated that when we reviewed this data, that there would be this significant lagging effect between when rates increased and then proportionately how funding decreased. But because actual changes to interest rates are not unknown previous to them happening, and you know about them ahead of time, I think the timeline actually lines up almost perfectly.
Matt Bertuzzi [00:09:16]:
Right.
Kyle Smith [00:09:16]:
Rates keep going up, funding keeps going down, and the time horizon is exactly the same. And you are already seeing in Q2 funding going back up. And the idea would be with the assumption that this rate cut is coming. So they talk about rate cuts or increases being priced into the stock market. It seems similar for venture funding. You are already modifying your behavior based off of an anticipated change in fiscal policy? Essentially, yeah.
Matt Bertuzzi [00:09:47]:
There's like real world things here. Like we, Kyle, you and I both have friends who have, some have kids, some have nieces, nephews or younger siblings who are like, is tech sales a job worth starting now? And I don't know how the perception is among those who aren't in it that tech is excruciating and brutal. Right now. Tech is normal. It is not the crazy times, but the tech market is. It's a good place to be, and it's an amazing place to build your career.
Kyle Smith [00:10:14]:
Definitely. And so the anticipation would be rates are going to come down, funding is going to go back up as the funding increases. That's where we will stay on top of the JOLTS data to prove out this theory.
Matt Bertuzzi [00:10:27]:
Right.
Kyle Smith [00:10:27]:
The assumption would be as the rates come down and funding that goes into technology companies increases, then you're going to see quits spike, job openings spike and layoffs drop.
Matt Bertuzzi [00:10:39]:
Yeah.
Kyle Smith [00:10:39]:
And so more people are going to quit their jobs. More companies are going to be hiring for more professional roles in technology organizations. And that is likely to mean positive things for those of us who play in the tech space.
Matt Bertuzzi [00:10:51]:
Yeah. Yep.
Kyle Smith [00:10:52]:
Summary is it's normal right this minute, two weeks, depending on what the Fed does, could cause additional disruption in a positive or negative way. And we'll find out really quickly.
Matt Bertuzzi [00:11:04]:
Yeah, absolutely. And let's just end on. Let's not forget that this is like recent earnings releases for large cap tech stocks. I mean, the beat Miss column is all green. That's not a screaming recession signal to me. Like, you can see there's some revenue misses on the margins. Maybe 10% are missing revenue, but on an earnings per share basis, that's green the whole way through.
Kyle Smith [00:11:27]:
Great.
Matt Bertuzzi [00:11:28]:
One would think that seems good. That seems like a positive sign. If we're, that's where we are today. Let's hope it gets better.
Kyle Smith [00:11:34]:
Perfect. And thanks, Matt. Thanks for listening to this episode of Market Mastery brought to you by The Bridge Group. If you're a revenue leader in the B2 B sales space or know someone who is, connect with me on LinkedIn. Don't forget to subscribe to stay updated on future episodes.