Starwood Capital's Barry Sternlicht Goes Over Europe, Japan and ETFs

Barry Sternlicht, Starwood Capital Group Chairman and CEO, runs the second largest real estate manager in the world. His unique position offers him a direct line of insight into the global economy amongst other things. He was a guest host on CNBC's Squawk Box Thursday morning. “The big headline these last six, nine months is the underwriting of Europe by the ECB [European Central Bank]. That Europe will survive, will do whatever it takes to survive, will even save small islands with few people that have begging crisis and deposits from Russian tycoons,” said Sternlicht. “So I think you've seen the X, the end of that stretch, and that changed things a lot for investors, I think they thought there was sort of a put under the world.”Sternlicht called this market one that was hard for those paying attention on a daily basis. “I think what you're seeing now in the markets is people are just generally nervous, very smart people are very nervous, because what you're doing by printing all of this money, when the Japanese Treasury essentially prints money, buys their debt, uses the money they're printing to buy stocks, those companies go out an compete on a global basis against our companies. If you step back, they shouldn't be able to do this,” said Sternlicht. “They shouldn't be able to create fake paper. And it devalues all currencies, it devalues paper currencies, and I think people are generally saying stuffs not working correctly. I mean, the Yen was supposed to collapse and everybody piled onto one side of the trade. You saw interest rates are boggling.” He called it anxiety inducing, but Sternlicht did say there was good news, saying as many others have recently that the housing market is coming back in a really big way, calling it a real recovery that's directly helping the consumer in the United States. “I think it's going to be bumpy, but I think the road is definitely higher until August when we have another discussion in Washington about some debt we have,” said Sternlicht.In regards to stocks, he said that you pick your spots, and that some stocks are oversold. Sternlicht avoids fixed income, which he said isn't a smart place to be, saying that the REITs in the last two weeks were off more than 10%. "It's interesting, in the stock market, these ETFs are creating havoc in the stock market for individual stock pickers. The buy and sell of entire sectors without discrimination between stocks in a sector, all of the pharmaceuticals, all of healthcare, all the utilities, all the mortgage REITs,” said Sternlicht. “Like all the residential mortgage REITs got killed when people thought rates were going to rise. We have a commercial mortgage REIT. We sold off with them only because the ETFs were selling, and so it's program selling. And Individual investors today are so nervous, like 'Oh my God, there must be something going on.' It's just ETF, that rebalancing of ETFs. We've seen this in gold. We've seen this. It creates wild gyrations and it makes people really nervous and uncomfortable.”