Thursday, May 13

I have a better handle on the sell-off than the Fed

Between tariffs, rising costs and the flattening yield curve, Starwood Capital Group Chairman and CEO Barry Sternlicht isn’t feeling too sanguine about the state of the U.S. economy, he said Wednesday in an interview with Cramer.

“I think the Fed is going to have to be careful,” he told the “Mad Money” host. “The economy’s not quite as strong as the number indicated.”

One of the real estate investor’s chief concerns was the yield curve, which is so flat as to almost make borrowing money at a two-year rate the same as borrowing at a 30-year rate.

“It’s not what we’re used to, but usually, it’s a signal of a downturn. I think it is a signal of a downturn,” he told Cramer.

And with a $300 billion stimulus package, the tax cuts and the trade dispute with China on the government’s plate, “it’s going to be tough” to get a handle on the situation, Sternlicht suggested.

“What people don’t understand about the tariffs is you’re going to see their impact, I think, in the first quarter of next year,” he said. “Because the inventory was here — it’s on the shelves, it’s in the warehouse, it was bought without the tariff. So you’re going to have a latent inflation pressure in the market which the Chinese are trying to deflate by knocking their currency down.”

Click here to watch Barry Sternlicht’s full interview.

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