More than 24,000 Technology sector employees have been laid off month-to-date making November the worst month of the year for layoffs as Technology companies prepare 2023 budgets. Q4 2022 could rival Q2 2020 when more than 60,000 Technology sector employees were laid off. Q4 2022 is tracking at approximately 37,000 Technology sector employee layoffs.

Our view is that we are just getting started as it relates to layoffs:

• Many Tech CEOs (private and public companies), will wait to see how business progresses in Q1 2023 before cutting headcount (or making additional headcount cuts).
• Given elevated interest rates and scarce liquidity, many unprofitable companies will be forced to restructure and/or file for bankruptcy protection. Even if the Fed were to hit the brakes tomorrow and simply hold the Fed Funds Rate and QT flat for a year, enough tightening has occurred to where many zombie companies won’t be able to pretend and extend for the duration of 2023.
• Fed Chair Powell knows all of this. Powell understands that the economy is softening, yet I am convinced Powell wishes to break the Fed put. If the equity market continues to move higher, I believe it is likely Powell will push through another 75 BPS increase in December rather than the 50 BPS hike most investors expect.

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