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00:00LET ' S BRING IN OUR GUEST OVERSEEING $3.4 BILLION. ALL OF THE VOLATILITY, SOME OF THESE WORRIES OVER THE LIQUIDITY SITUATION AND EASE OF TRADING ACROSS VARIED ASSET CLASSES. ARE YOU FINDING OPPORTUNITIES HERE? > > ABSOLUTELY. WITH VOLATILITY COMES OPPORTUNITY. AND WHAT WE ARE SEEING OUT THERE WHETHER IT IS INVESTMENT GRADE REDDIT, CRYPTIC -- CREDIT, CRYPTO, THERE IS REAL WEAKNESS IN SITUATIONS WHERE INVESTORS ARE DEPENDENT -- PEOPLE ARE FOR THE FIRST TIME LOOKING AT FUNDAMENTAL CASH FLOWS AND SAYING, WHAT ARE THESE THINGS WORTH? THEY ARE DISCOUNTING THEM BASED ON ELEVATED ASSUMPTIONS ON RATES AND CREDIT SPREADS. HAIDI: WE HAVE BEEN HEARING FROM JAY POWELL AND WE EXPECT TO HEAR FROM CHARLIE EVANS TO TALK ABOUT FRONTLOADING. IT KIND OF PRESENTS THIS COHESIVE IMAGE OF A VERY DETERMINED AND HAWKISH FED TO TRY TO MAKE UP FOR PERHAPS BEING BEHIND THE CURVE. DO YOU THINK MARKETS HAVE ADEQUATELY PRICED THIS IN? WILL THEY CREATE DEEPER LIQUIDITY CONCERNS? DAN: I THINK THE STOCK MARKET IN A VERY SHORT-TERM SENSE IS VERY OPTIMISTIC. WHAT YOU HAVE SEEN WITH THE FED OVER THE LAST TWO YEARS IS THEY ARE A DAY LATE AND A DOLLAR SHORT. THERE IS MORE TALK AND LESS DOING. WE NEED TO SEE MORE DOING AT LESS TALK. AND COMPARED WITH FEDERAL SPENDING, I THINK WE HAVE REAL OPPORTUNITY TO SEE SOME DOWNSIDE FROM HERE. SHERY: WHAT ARE WE SEEING IN TERMS OF ACTION COMING FROM THE PBOC? WE CONTINUE TO WATCH PERHAPS A LITTLE BIT MORE SUPPORT COMING FROM CHINA, BUT INVESTORS SEEM TO BE CONTINUOUSLY GETTING DISAPPOINTED AT THIS POINT. ARE THERE ANY OPPORTUNITIES YOU LIKE ACROSS THE COUNTRY? DAN: IN CHINA, WE ARE VERY ACTIVE WITH PARTNERSHIPS FOCUSING ON NONPERFORMING LOANS. WE ARE PRIMARILY FOCUSED ON REAL ESTATE IN CHINA. I THINK THERE ARE REAL OPPORTUNITIES THERE AND WE HAVE A VERY LARGE, TRILLION PLUS LEVEL TYPE OF REAL ESTATE ISSUE IN MAINLAND CHINA. I DON ' T THINK THE APPROACH ON OMICRON IS HELPING THAT ANY. I THINK THERE WILL BE A REALLY LONG-TERM OPPORTUNITY THERE TO REALLY RATIONALIZE THE PROPERTY SECTOR IN CHINA. HAIDI: AND YOU WERE ALSO INVOLVED IN SMALL-SCALE NPL ' S WHEN IT COMES TO HARD ASSETS. WHAT ARE YOU SEEING ACROSS THAT SECTOR? DAN: YOU ARE SEEING THE CONFLUENCE OF INFLATIONARY PRESSURES AND THE REALIZATION IN THE COMMERCIAL REAL ESTATE SECTOR OF THE LONG-TERM EFFECTS OF COVID. YOU SEE A LOT OF TRANSITIONAL PROPERTY OPPORTUNITIES WHETHER IT IS NONPERFORMING LOANS, DISCOUNTED PURCHASE OFFERS FROM BANKS, BANKS LOOKING TO RATIONALIZE THEIR PORTFOLIOS. WE ARE SEEING THAT WEAKNESS BEGINNING IN THE U.S. AND A LOT MORE POST GFC OPPORTUNITIES IN SOUTHERN EUROPE GOING WAY BACK. AND AS I MENTIONED, THE EMERGING OPPORTUNITIES AVAILABLE IN CHINA AND SOUTHEAST ASIA. HAIDI: THE ENERGY TRANSITION SPACE IS INTERESTING AT THE MOMENT GIVEN THERE IS A HIGH LEVEL OF DISCOMFORT FOR A LOT OF INVESTOR HOUSES. HOW THEY MANAGED THIS TRANSITION TO FOSSIL FUELS AND PERHAPS IT IS NOT AS QUICK AS WE INITIALLY THOUGHT IT WAS GOING TO BE. WHERE DO YOU FIND THE OPPORTUNITIES THERE? DAN: I THINK WE TAKE A LONGER-TERM VIEW OF WHAT THE DEFINITION OF ENERGY TRANSITION IS. THE REALISTIC NUMBERS OUT THERE SHOW YOU THAT IT IS GOING TO BE 30 OR 40 YEARS BEFORE WE SEE A REAL MATERIAL TRANSITION. WE ARE VERY INVOLVED IN CONTINUED, APPROPRIATE, AND JUDICIOUS EXPIRATION OF FOSSIL FUELS. AND ON THE OTHER HAND, WE ARE INVOLVED IN FINANCING, CHARGING SYSTEMS, AND OTHER MEANS BY WHICH OVER THE LONG HAUL, AN APPROPRIATE LEVEL OF TRANSITION WILL HAPPEN. HAIDI: OPPORTUNITIES IN AUSTRALIA IS SOMETHING THAT YOU FLAGGED AS WELL. DAN: AUSTRALIA-NEW ZEALAND. WE ARE TERRIBLY ACTIVE IN HELPING NEW ZEALANDERS GET ACCESS TO HOUSING. THERE HAS BEEN A VERY SIGNIFICANT SECULAR SHORTAGE THEY ARE ON THE HOUSING FRONT. WE FOUND A WAY TO BE VERY ACTIVE IN AFFORDABLE HOUSING IN NEW ZEALAND. IN AUSTRALIA, I THINK THERE ARE NON-BANK OPPORTUNITIES ACROSS SPECIAL SITUATION CORPORATE INVESTMENT AND STRUCTURE FINANCE. WE ARE SEEING MORE RATIONAL FINANCE.

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Arena Investors' Zwirn on Markets and Strategies

Dan Zwirn, Arena Investors CEO and CIO, discusses his fixed income strategies. He speaks with Shery Ahn and Haidi Stroud-Watts on "Bloomberg Daybreak: Asia". (Source: Bloomberg)

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