Sternlicht Says the Fed Is on the Way to Overstimulating

Well, you know, I went on TV the first day of the crisis on the 13th, March 13th, and I was pretty bullish. I thought, you know, this was a flu, this is going to pass, that the government would stimulate and probably overstimulate. And I think they're on their way to overstimulating, by the way, which means we'll have to deal with the ramifications of trillions of dollars of new quantitative easing or paper printing. And there are long-term benefits to what's taking place, which we already got lower mortgage rates for homeowners, and that'll be a tax cut to the consumer. And now you have this oil price, which is giving people a tax cut in the form of lower energy bills. So, and then on top of it, I was pretty optimistic, and people thought I was nuts, about new innovations in the medical space that would either come with a cure, a way to help people with the disease. And every day I read about another drug or another condition or another way to help people that have contracted this.

So I think that, you know what I know, so the answer is no, actually. I still believe all those things are true. I don't know how to think about the trillions of dollars that will come into the economy that will then sort of go out of the economy. And I think the slope of the recovery, I think the market may be a little ahead of itself on the slope of the recovery. I heard the prior interview, and the woman was right, she's Goldman Sachs. I think the manufacturing sectors will come back, but you can look over at China. We were all encouraged by China's recovery, the fact that the factories were open, but if you look at the real economy, the restaurants, the shopping centers, the hotels in China, hotels are running 30 percent occupancy. So people aren't traveling, they're not going to the restaurants, they're not going to the mall. And I think it'll be slower here, depending on what happens on the medical front. And I think obviously if it's all clear and nobody's dying, Americans will forget, and the recovery will pick up steam dramatically in the third and fourth quarter. These first two quarters are actually, this quarter will be a mess, and I think the market's just looking through it and saying it doesn't really matter much. But there are sectors of the markets that have rallied so hard that they're off like 10 percent from their highs, and that seems inappropriate because the economy's been damaged enough that we're probably not at cyclical highs or all-time highs that we were at when it started. So I think certain sectors, I think you're seeing it right now in the stocks of like a Microsoft or even the Amazons, which are not really responding. It's the shredded stocks that were impacted precisely by this that have been recovering the hardest, like our company, which, you know, we announced twice to our property trust, we had over 800 million dollars of cash on hand, and we still got crushed. And by the way, that's the best functioning of the market mechanics today, which is it's dominated by index ETFs, the exchange-traded funds, and people are buying and selling all the mortgage REITs regardless of the individual characteristics of the company. And so, you know, the baby got swept out with the bathwater. And so some companies really had challenges. You saw companies sell billions of paper in distress situations over weekends with bid lists, people are freaking out. Well, Starwood Property Trust never had that situation. We never put anything up for sale, and we never had a market call we couldn't meet. And we're fighting on a thermal in a cash, and it didn't matter, they took our stock down like we were going out of business tomorrow.