Starwood Capital’s Barry Sternlicht says the U.S. is going into a ‘serious’ recession
Starwood Capital CEO Barry Sternlicht stated Tuesday {that a} extreme financial downturn is inevitable. “I feel we’re going right into a critical recession,” Sternlicht stated on CNBC’s ” Squawk Field .” Recession fears have solely worsened not too long ago as closures of Silicon Valley Financial institution and Signature Financial institution , and capital points at Credit score Suisse and First Republic , raised issues in regards to the state of the banking trade. Jamie Dimon, longtime JPMorgan Chase CEO, stated in his annual letter to shareholders that the banking disaster will not be over and can trigger “repercussions for years to return. ” Nonetheless, Dimon believes that the U.S. may be capable of skirt a recession. Whereas an inverted Treasury yield curve has been a dependable recession indicator for many years, it is probably not true this time due to the large impact of quantitative tightening, Dimon stated. He believes that the inversion continues to be pushed by prior quantitative easing and never the dramatic change in provide and demand. Sternlicht disagrees with Dimon’s name as he believes the federal government has created an enormous deficit drawback and rates of interest would solely go up due to it. The “deficit will develop, we’ll must print extra paper that ought to power charges up, which might make the financial system weaken additional,” Sternlicht stated. Sternlicht beforehand stated he and his colleagues checked out six regional banks and studied their mark-to-market losses on property. Starwood decided all of them are successfully bancrupt. “The credit score markets are good. They know that this can’t final and we now have the very low client confidence, very low financial savings charges, very low CEO confidence, and a collection of layoffs coming by way of the service industries,” Sternlicht stated.