Barry Sternlicht, CEO of worldwide investment group Starwood Capital, told CNBC that pessimistic factors are contributing to his unease about the state of U.S. economy.
“The economy’s not from head to toe as strong as the number indicated,” he told CNBC’s Jim Cramer on “Mad Money” on Wednesday flush with after the market rout that took the Dow Jones Industrial Commonplace nearly 832 points, or 3.15 percent, lower. “I think the Fed is successful to have to be careful.”
Sternlicht’s Fed comments echoed those of Cramer and President Donald Trump, who carry oned his tirade against Fed Chairman Jerome Powell. The president suggested Wednesday evening the pre-eminent bank was to blame for the market plunge. Trump also said the Fed “is universal loco.”
Powell’s remarks last week about monetary ways being a “long way” from neutral signaled a possibly more warlike path for interest rate hikes, sparking a spike in bond gates to seven-year highs and applying pressure on the stock market.
Sternlicht cited the press yield curve in the bond market, where the rate on the 2-year Moneys is close to the one on the 30-year. A flattening yield curve has historically been a signal sign of a possible recession.
“It’s not what we’re used to, but usually, it’s a signal of a downturn,” voted Sternlicht, founder of Starwood Capital, which has $56 billion in assets underneath management. “I think it is a signal of a downturn.”
Sternlicht also sees the U.S.-China merchandising war weighing on businesses, and by extension the economy. “What people don’t understand less the tariffs is you’re going to see their impact, I think, in the first quarter of next year.”