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    in Business

    Real estate titan Barry Sternlicht says he will ‘have to’ drop employees in favor of AI

    Billionaire Barry Sternlicht, the chairman and CEO of Starwood Capital Group, is a legendary, legacy real estate investor.
    Brendan Wallace is an entrepreneur who co-founded Fifth Wall, a venture capital firm investing in property technology and decarbonizing real estate.
    Together they discuss AI, data centers, interest rates and where they’re betting next.

    A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.
    Billionaire Barry Sternlicht, chairman and CEO of Starwood Capital Group, is a legendary, legacy real estate investor. Brendan Wallace is an entrepreneur who co-founded Fifth Wall, a venture capital firm investing in property technology and decarbonizing real estate. The pair first met in the gym. Now, Wallace can say Sternlicht is a mentor – as well as a Fifth Wall investor – and Sternlicht jokes that Wallace is his trainer.

    Together they gave CNBC Property Play a rare glimpse into how old-school commercial real estate investing is pivoting to a new tech-driven world order and how that new world order still relies on lessons learned in the past. 
    Here are some of the highlights from the conversation, edited for clarity and length:

    On CRE investing

    Sternlicht: We endured a 500 basis point, fairly rapid increase in rates, and most people who were invested had to pay some price for that, whether the yields on property went up or they weren’t properly hedged. Your costs went up, your expenses, and they drained a lot of cash flow from assets that might have gone into fixing the assets up. That’s behind us now, and there’s no doubt that interest rates are going down. … In May of next year, Jerome [Powell] will  be out [as Federal Reserve Chairman], and nobody’s getting that job without agreeing to lower rates.
    I think they should lower rates. I think inflation that we’re seeing is tariff related. It will continue. It’ll get worse, probably, in the fourth quarter, when the new inventories hit the shelves and the tariffs can no longer be ignored. 
    Wallace: The rate increases that Barry was mentioning, those impacted prop tech definitionally, because all tech companies, all loss-making businesses, rerated all at the same time. And at the same time, the demand from commercial real estate stopped. 

    I would say an overlay on top of it was also that a big part of where real estate companies were investing in the last four years was around decarbonization efforts, so trying to conform to new carbon neutrality laws … and anticipating this kind of wave of decarbonization. And I feel like with [President Donald] Trump’s election, it kind of felt like they got a hall pass, certainly for four years.

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    On AI and data centers

    Sternlicht: We’ve probably got $20 billion dedicated to [the data center] space. I think it’s a different issue than you think. Most of us don’t build until we get a hyperscaler lease. So we get the lease from Amazon, Microsoft, Google, Oracle. What we’re watching now is the credit worthiness of the tenant, and particularly Oracle, because Oracle is doing all these deals back-ended to [ChatGPT], and Chat is a startup that doesn’t make money and requires hundreds of billions of dollars to grow to the scale they want to be. 
    There’s no question AI is going to change the entire world and do it much faster than anything we’ve ever seen before, much faster than the internet, certainly faster than the Industrial Revolution. That is terrifying to me. I mean, I’m not so complacent. I look at … how we spend money, and what I can do with AI agents that I do with humans today, and it’s terrifying for the people. I think we have to let people go, right? Jobs of 15 people can be done with a chatbot that costs me $36 a month. 
    Wallace: I was trying to trace all these pretty Byzantine and somewhat incestuous commitments that are happening between the large tech companies, between the digital infrastructure providers, and it’s actually very hard to trace who’s going to ultimately pay for it all, but ultimately it has to be paid for in the economy.
    The way to just acid test whether it makes sense is if you looked at the amount of AI compute that will be required to fill all the data centers that are in production or have been announced to go into production, and then you assume that the tech companies have to make some profit on top of that to justify it, which they’re not today, but let’s assume they have to. Take any margin you want, assume that’s the revenue that’s then therefore flowing to large language models and AI. What percent of U.S. GDP would that be today if you ran that math? My fear is that it might be like 120% of U.S. GDP. 

    On their next bets

    Sternlicht: We’re heavily investing in Europe, actually. Not here. They’ve done the stimulus package. They have low rates. They don’t have, really, inflation. They don’t have tariffs. It’s amazing, having returned from Europe and the Middle East, I can buy everything cheaper in Europe than I can here now.
    Wallace: New York City. People overestimate the durability of these political vibe shifts. Within two years of electing Trump, we elected [Zohran] Mamdani to run New York, and I just think these things move dialectically. Over the long term, New York is going to be super valuable. So if I were a betting person, I didn’t have to make a return in the next four years, I would bet on New York. More

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    in Finance

    Old folk are seized by stockmarket mania

    Generation Z has already made its mark on investing—consider crypto, FOMO, meme stocks and gamified investing. But, in a less flashy way, it is grandparents who are truly shaking things up. America’s surging stockmarket has been driven, most of all, by old investors. More

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    ‘Big Short’ investor Michael Burry accuses AI hyperscalers of artificially boosting earnings

    Michael Burry attends the New York premiere of “The Big Short” at the Ziegfeld Theater in New York City on Nov. 23, 2015.
    Jim Spellman | WireImage | Getty Images

    Michael Burry, the investor made famous by “The Big Short” who recently roiled the market with a tech short bet, is accusing some of America’s largest technology companies of using aggressive accounting to pad their profits from the artificial intelligence boom.
    In a post Monday on X, the Scion Asset Management founder alleged that “hyperscalers” — the major cloud and AI infrastructure providers — are understating depreciation expenses by estimating that chips will have a longer life cycle than is realistic.

    “Understating depreciation by extending useful life of assets artificially boosts earnings – one of the more common frauds of the modern era,” Burry wrote. “Massively ramping capex through purchase of Nvidia chips/servers on a 2-3 yr product cycle should not result in the extension of useful lives of compute equipment. Yet this is exactly what all the hyperscalers have done.”
    Burry estimated that from 2026 through 2028, the accounting maneuver would understate depreciation by about $176 billion, inflating reported earnings across the industry. He singled out Oracle and Meta Platforms, saying their profits could be overstated by roughly 27% and 21%, respectively, by 2028.
    CNBC has reached out to Oracle and Meta for comments. Nvidia declined to comment. Burry’s accusation is a serious one, but could be hard to prove because of the leeway companies are given in estimating depreciation. CNBC was not independently able to confirm this practice was being done by the companies.
    When paying for a large asset upfront — like semiconductors, servers, etc — a company is then allowed under generally accepted accounting principles, or GAAP, to spread out the cost of that asset as a yearly expense that is based on the company’s estimate of how rapidly that asset depreciates in value. If companies estimate a longer life cycle for the asset, they can then lower the yearly depreciation expense that hits the bottom line.
    Burry, who famously bet against subprime mortgages before the 2008 financial crisis, has warned this year that AI enthusiasm resembles the late-1990s tech bubble.

    Burry last week revealed seemingly fresh wagers against AI favorites Nvidia and Palantir Technologies. He disclosed put options with a notional value of about $187 million against Nvidia and $912 million against Palantir as of Sept. 30, according to a regulatory filing. The filing didn’t specify the strike prices or expiration dates of the contracts.
    The disclosure prompted a sharp reaction from Palantir CEO Alex Karp, who called Burry’s wagers “super weird” and “bats— crazy.” It’s not clear whether he still holds those positions or whether they were just a hedge.
    Shares of Nvidia rebounded nearly 6% on Monday after dropping 7% last week. Palantir saw its shares pop almost 9% on Monday following a 11% sell-off last week. Nvidia was lower again on Tuesday.
    Burry said in his X post that “more detail” was coming on Nov. 25 and that readers should “stay tuned.” More

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    Trump proposes 50-year mortgage, but some say homeowner savings would be minimal

    In another attempt to make homebuying more affordable, President Donald Trump floated the idea of a 50-year mortgage in a social media post. In response, Federal Housing Finance Agency director Bill Pulte, who oversees Fannie Mae and Freddie Mac, posted that they are “working on it,” and that it would be, “a complete game-changer.”
    The purpose of a longer-term mortgage would be to lower the monthly payment for homeowners. The longer the term of the loan, the smaller the principal needed each month to pay it off in full. But such a plan has other trade-offs.

    Using the latest median sale price of a home from September, $415,200, according to the National Association of Realtors, and the current interest rate of about 6.3%, according to Mortgage News Daily, on a 30-year fixed loan with a 20% down payment, the monthly payment of just principal and interest would be $2,056. If you raise the length to 50 years, at the same interest rate, that payment would be $1,823, a savings of $233 per month.
    Homeowners, however, would not build equity as quickly because their principal payments would be smaller. The amount of interest paid to lenders would be 40% higher.

    How it might work

    The real question is can Fannie and Freddie do this. Analysts say it is possible, but a 50-year mortgage does not currently meet the definition of a qualified mortgage under the Dodd-Frank Act, which provides investors with a backup from Fannie and Freddie if a loan goes bad. But regulators were given the authority to change that in order to insure mortgage affordability. That, however, could take up to a year, given the need for congressional approval, according to Jaret Seiberg, a financial services and housing policy analyst at TD Cowen.
    “Fannie and Freddie could establish a secondary market for 50-year mortgages in advance of policy changes. They even could buy mortgages for their retained portfolios. Yet this would not alter the legal liability for lenders. It is why we believe lenders will not originate 50-year mortgages absent QM [qualified mortgage] policy changes,” wrote Seiberg in a note to clients.

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    How it would impact rates

    Then there is the question of the mortgage rate. The average rate on the 15-year fixed mortgage is currently 66 basis points lower than the rate on the 30-year fixed, according to the Mortgage Bankers Association. This would imply that the rate on the 50-year fixed would be higher. It all depends on investor demand for the product.

    “There is not currently a secondary market for such loans, nor would a robust secondary market be cultivated any time soon,” said Matthew Graham, chief operating officer at Mortgage News Daily. “That means that, in addition to the extremely low amount of principal paid down in earlier years of the loan, the interest rates would also be quite a bit higher than 30-year loans — a double whammy for those with any hope of building equity.”
    Graham said that for all practical purposes, the loan would be more akin to an interest-only loan, because very few people would keep a home for 50 years. Homeowners could still gain equity through home price appreciation, but prices have been softening swiftly across the nation this year, with nowhere near the appreciation seen in the years previous.

    How it impacts affordability

    Even realtors agree that the savings to homeowners would be minimal.
    “This is not the best way to solve housing affordability. The administration would do better to reverse tariff-induced inflation, which is keeping the rates on existing mortgages high,” wrote Joel Berner, senior economist at Realtor.com in a release.
    Others note that this new mortgage product would likely depend on Fannie Mae and Freddie Mac remaining under government conservatorship. The Trump administration has said that the two will be taken private and then have an initial public offering sometime in the near future.
    “Adoption of a 50-year mortgage product might complicate the path to privatization for Fannie Mae and Freddie Mac,” analysts at Evercore ISI wrote in a note to clients. “That said, we understand that the Administration is expecting the GSEs to remain under conservatorship after it sells roughly a 5% stake to the public. This would allow the Administration to maintain control of the GSEs for the foreseeable future.”
    Home affordability has been a major pressure point for the Trump administration. Historically low interest rates resulting from pandemic-driven economic policy caused an historic run on housing that catapulted home prices more than 50% higher in just five years. As a result, home sales have weakened dramatically, as has mortgage demand.
    The average age of a typical first-time buyer in 1991 was 28. By 2024, it had reached 38, according to a report from the National Association of Realtors, whose deputy chief economist called the number, “shocking.”
    The Trump administration has been pressuring builders to put up more homes in order to ease prices, claiming they are sitting on an oversupply of empty lots. Builders contest that claim and continue to cite high costs for land, labor and materials.
    On the company’s latest earnings call, PulteGroup CEO Ryan Marshall said he agreed with the president’s perspectives as it pertains to an undersupply of roughly 4 million homes for sale, but added, “While this supply deficit certainly has an impact on affordability generally, the complexities of the new home construction industry dictate that tackling a problem of this scale requires a coordinated and comprehensive approach that brings together federal, state, and local leaders working in partnership with the new home construction industry.” More

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    Flight disruptions from shutdown pile up as Trump threatens air traffic controllers

    More air travel disruptions piled up Monday as the longest-ever U.S. government shutdown continued.
    Air traffic controllers missed their second full paycheck of the shutdown.
    The Senate made progress overnight on a deal that could end the shutdown, but it has not yet approved a funding bill.
    President Donald Trump threatened to dock air traffic controllers’ pay if they didn’t show up to work.

    Flight timings and cancellations are displayed on the departures board, a month into the ongoing U.S. government shutdown, at Ronald Reagan Washington National Airport in Arlington, Virginia, U.S., November 9, 2025.
    Annabelle Gordon | Reuters

    Flight cancellations were again piling up on Monday as air traffic controller shortages, worsened by the longest-ever U.S. government shutdown, snarled air travel coast to coast while President Donald Trump threatened to dock air traffic controllers’ pay if they are absent from work.
    On Monday, 1,623 of the 25,735 scheduled U.S. flights were canceled, around 6.3% of the day’s schedule, though on-time departures were better than average, a good sign after days of travel snarls, according to aviation data firm Cirium.

    Last week, the Trump administration ordered airlines to cut domestic flights at 40 major U.S. airports starting with 4% reductions last Friday and ramping up to 10% by this coming Friday, Nov. 14, citing strains on air traffic controllers.
    “All Air Traffic Controllers must get back to work, NOW!!!,” Trump said in a post on Truth Social, adding that he would recommend $10,000 bonuses for any air traffic controllers who didn’t take any time off during the shutdown. He said those who don’t immediately return to work would be “docked.”
    The National Air Traffic Controllers Association in response said that air traffic controllers are “unsung heroes, who report for duty to safely guide this country’s passengers and cargo to their destinations.” The organization said they “deserve our praise” and “have certainly earned it.” 
    Disruptions over the weekend included 18,576 delayed flights while 4,519 were canceled, according to FlightAware. Cancellations spilled over from regional, short-haul jets — which the largest U.S. airlines rely on for around half of domestic flights — to mainline flying.
    United Airlines and Delta Air Lines were each offering flight attendants extra pay to pick up flights, according to company messages seen by CNBC. United was also offering pilots extra pay for more flights than it usually does, an airline spokesman said. Such extra pay is common during storms or other disruptions.

    American Airlines Chief Operating Officer David Seymour said Monday that 250,000 of its customers were affected by disruptions over the weekend, with 1,400 cancellations attributed to air traffic control.
    “This is simply unacceptable, and everyone deserves better. Our air traffic controllers deserve to be paid and our airline needs to be able to operate at a level of predictability and dependability that no major airline was able to provide the flying public this weekend,” he said in a note to staff that was seen by CNBC.
    Airlines were waiving change fees and in some cases, fare differences, depending on when customers could rebook travel. Customers could also request a full refund for the portion of their tickets they were unable to fly.
    A sign of how severe air travel disruptions have become during the government shutdown: Sunday’s 2,631 U.S. flight cancellations, 10% of the day’s schedule, marked the fourth-worst day since January 2024, Cirium said.
    In comparison, on Friday morning, as Trump administration-mandated flight cuts took effect, cancellations ranked 72nd since the start of last year.

    Read more CNBC airline news

    The disruptions that upended the travel plans for hundreds of thousands of travelers forced them to look for alternative transportation. Car rental company Hertz last week reported an increase in one-way demand. There’s also been increased demand for private jet flights in recent days, according to the CEO of charter and fractional ownership company Flexjet.
    Though the Trump administration order didn’t initially require private aviation to cut in the same way as commercial airlines, the Federal Aviation Administration on Monday began limiting those flights at a dozen U.S. airports. However, many private jet operators don’t use the busiest commercial airports, said the National Business Aviation Association.

    Increased strain

    Air traffic controllers missed their second paycheck of the shutdown on Monday, though they are still required to work. Some of them have taken second jobs to make ends meet, government and union officials have said.

    A commercial airliner takes off past the air traffic control tower at San Diego International Airport during the first day of a partial U.S. government shutdown in San Diego, California, U.S., Oct. 1, 2025.
    Mike Blake | Reuters

    “Now, they must focus on child care instead of traffic flows. Food for their families instead of runway separation,” Nick Daniels, president of the National Air Traffic Controllers Association, said at a news conference on Monday. “The added stress leads to fatigue, the fatigue has led to the erosion of safety and the increased risk every day that this shutdown drags on.”
    The Senate made progress overnight on a deal that could end the shutdown, but it has not yet approved a funding bill.
    Daniels said it isn’t yet clear how long it would take for controllers to receive back pay for their work. In the shutdown that ended in 2019, it took about 2½ months before the workers were made whole, he said.
    Trump’s comments about air traffic controllers on Monday drew criticism from Rep. Rick Larsen, D-Wash., ranking member of the House Committee on Transportation and Infrastructure, who called the statement “nuts!” and said it ran counter to Transportation Secretary Sean Duffy’s call for aviation workers’ support.
    “The women and men working long hours in air traffic control towers to keep the aviation system running deserve our thanks and appreciation, not unhinged attacks on their patriotism,” Larsen said.
    An end to the shutdown also doesn’t mean that the flight restrictions will be lifted immediately. The FAA last week said it will determine whether to increase or decrease the flight restrictions based on safety data.
    While airlines had little time to make the last-minute schedule changes when the order came out last week, to ramp up flying again they will need time to adjust schedules, sell seats and position planes and crews. More

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    More than 100 lawmakers push Starbucks to resume union negotiations

    Starbucks baristas gather outside a Starbucks store as they protest against the company during a rally to demand a new contract in New York City, on October 28, 2025. The Starbucks Workers United is fighting for a new contract that delivers improved staffing hours, take-home pay, and on-the-job protections for baristas. (Photo by TIMOTHY A.CLARY / AFP) (Photo by TIMOTHY A.CLARY/AFP via Getty Images)
    Timothy A.clary | Afp | Getty Images

    More than 100 lawmakers urged Starbucks to resume bargaining talks with Workers United, the union representing the coffee giant’s baristas, in letters sent to CEO Brian Niccol on Monday.
    The letters come ahead of a threatened strike led by the union in 25 cities on November 13, Starbucks’ Red Cup day, one of its biggest sales days of the holiday season.
    Both sides have pointed blame at the other party and claim they’re ready to negotiate.

    Starbucks workers and supporters practice picket outside a Starbucks location in New York, US, on Wednesday, Oct. 1, 2025.
    Michael Nagle | Bloomberg | Getty Images

    More than 100 lawmakers urged Starbucks to resume bargaining talks with Workers United, the union representing the coffee giant’s baristas, in letters sent to CEO Brian Niccol on Monday.
    The two letters, from the Congressional Labor Caucus and a group of senators led by Sen. Bernie Sanders, I-Vt., come as the union threatens a strike in 25 cities starting Thursday. That coincides with Starbucks’ Red Cup Day, one of its biggest sales days of the holiday season.

    “It is clear that Starbucks has the money to reach a fair agreement with its workers,” the Senate letter, signed by 26 lawmakers, reads. “Starbucks must reverse course from its current posture, resolve its existing labor disputes, and bargain a fair contract in good faith with these employees.”
    A second Congressional Labor Caucus letter is signed by 82 lawmakers.
    The lawmakers argued the coffee giant has the resources to increase workers’ pay and benefits, citing Niccol’s $95 million compensation since his hiring. The company said $90 million of the compensation package was in the form of stock awards to cover equity Niccol left behind at Chipotle when moving to Starbucks to take the CEO role.

    Senator Bernie Sanders (I-VT) speaks to reporters outside the Senate Chamber of the US Capitol Building on Nov. 8, 2025 in Washington, DC.
    Aaron Schwartz | Getty Images

    Last week, Workers United said its strike authorization vote won a 92% approval from its members. If the union decides to strike, it would be open-ended. Workers United is pushing for improved hours, higher wages and the resolution of hundreds of unfair labor practice charges against the company.
    The two parties are not in active contract talks after discussions fell apart late last year. Starbucks and the union entered into mediation in February, and hundreds of barista delegates voted down the economic package Starbucks proposed in April.

    Both sides have pointed blame for failure to reach a bargaining agreement at the other party and say they’re ready to negotiate.
    Workers United, which began organizing at Starbucks in 2021, says it now represents more than 12,000 workers across more than 650 stores. The company last week told CNBC that the union only represents 9,500 workers at 550 cafes.
    Starbucks Workers United spokesperson Michelle Eisen said in a statement last week, “We want Starbucks to succeed, but turning the company around and bringing customers back begins with listening to and supporting the baristas who are responsible for the Starbucks experience. If Starbucks keeps stonewalling, they should expect to see their business grind to a halt. The ball is in Starbucks’ court.”
    In response to the strike vote results last week, Starbucks said it will be ready to serve customers across its nearly 18,000 company-operated and licensed stores this holiday season.
    “As everybody knows, Starbucks offers the best job in retail, including more than $30 an hour on average in pay and benefits for hourly partners. Workers United, which represents only 4% of our partners, chose to walk away from the bargaining table. We’ve asked them to return—many times. If they’re ready to come back, we’re ready to talk. We believe we can move quickly to a reasonable deal,” Starbucks spokesperson Jaci Anderson told CNBC in a statement Monday.
    In a letter to workers addressing the strike authorization vote last week, Sara Kelly, chief partner officer at Starbucks, echoed the belief that an agreement could be reached swiftly.
    “For months, we were at the bargaining table, working in good faith with Workers United and delegates from across the country to reach agreements that make sense for partners and for the long-term success of Starbucks,” Kelly said. “We reached more than 30 tentative agreements on full contract articles.”
    “Our commitment to bargaining hasn’t changed,” she added. “Workers United walked away from the table but if they are ready to come back, we’re ready to talk. We believe we can move quickly to a reasonable deal.”
    Reuters earlier reported on the letters from lawmakers.
    — CNBC’s Amelia Lucas contributed to this report More

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    Recessions have become ultra-rare. That is storing up trouble

    From 1300 to 1800, economic historians estimate that England and then Britain were in recession almost half the time. The economy was volatile, with storming recoveries following crashing downturns. As capitalism matured and policymaking improved, recessions became less frequent. In the 19th century the country was in recession only a quarter of the time, a share that fell lower still in Britain and other rich countries in the 20th century. Today things are even more placid: recessions have become an endangered species. More

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    Miran says half-point cut ‘appropriate’ for December, but Fed should at least reduce by a quarter point

    Stephen Miran, governor of the US Federal Reserve, at the Nomura Research Forum during the International Monetary Fund (IMF) and World Bank Fall meetings in Washington, DC, US, on Wednesday, Oct. 15, 2025.
    Samuel Corum | Bloomberg | Getty Images

    Federal Reserve Governor Stephen Miran on Monday advocated for further interest rate cuts as a way stave off a potential economic softening ahead.
    In a CNBC interview, the central bank official held to his belief that the Fed should be moving at an even more rapid pace than its traditional quarter percentage point reductions.

    He advocated, as he has at the previous two Federal Open Market Committee meetings, for a 50 basis point, or half percentage point, reduction, though he said there at least should be a quarter-point easing.
    “Nothing is certain. We could get data that would make me change my mind between now and then,” Miran said. “But failing new information that’s made me update my forecasts, looking out in time, yeah, I would think that 50 is appropriate, as I have in the past, but at a minimum 25.”
    Despite Miran’s urging for bigger moves, the FOMC in both September and October opted for quarter-point cuts. Miran voted against both those moves but was not joined by any of his colleagues. Kansas City Fed President Jeffrey Schmid voted “no” in October, but only because he wanted to no cuts.
    Though there were only two votes against the October cut, public statements from multiple officials have indicated a wide dispersion of opinion among officials.
    Fed Chair Jerome Powell alluded to the disagreements at his most recent news conference, in which he indicated that another cut in December is not a foregone conclusion. Some policymakers have expressed hesitancy to but based on data showing inflation remains well above the Fed’s 2% target, while others in favor of lowering rates fear further labor market deterioration.

    Miran said not continuing to ease would be short-sighted.
    “If you’re making data for what, if you’re making policy for what the data are now, you are backward looking, because it will take 12 to 18 months for that to hit the economy. So you need to make policy now based on where you think the economy is going to be a year to a year and a half from now.”
    Policymakers have been handcuffed by a lack of official economic data during the government lockdown. Miran said the data that is available has showed softening in both inflation and the labor market, which itself should make the Fed at least incrementally more dovish than its collective forecast in September indicating a total three cuts this year.
    Markets are pricing in about a 63% chance of a third reduction in December, though that has been falling gradually since the October Fed meeting, according to the CME Group’s FedWatch. More