Ron Bohlert, director of the global corporate client group with NYSE Euronext, joined REIT.com for a video interview at REITWise 2013: NAREIT’s Law, Accounting and Finance Conference in La Quinta, Calif.
Bohlert discussed some of the early trends in the U.S. equity markets in 2013.
“So far this year, we’re seeing a continuation of the rally that we saw throughout 2012, with the Dow Jones Industrial Average, the S&P 500 as well as other indexes at or near all-time highs,” Bohlert said. “An interesting aspect of this rally has been the historically high levels of correlation across all asset classes, sectors and stocks. Some might argue that the rally we’re seeing is a little surprising, considering all of the headwinds that we’ve been facing last year and into this year.”
Bohlert pointed out a number of potential landmines that have yet to derail the market rally, such as the fiscal cliff and ongoing troubles in the European financial system. As such, he speculated as to the reasons behind the strong performance.
“One of the bigger reasons for the rally has been earnings,” Bohlert said. He noted that 74 percent of companies in the S&P 500 have beat expectations in their reports from the fourth quarter of 2012, besting the historical average of 62 percent.
Bohlert also said the federal government’s “accommodative” monetary policy is encouraging both lending on the part of banks and greater borrowing and spending. Employment growth also has played a role in boosting the economy, according to Bohlert. That ties into the process for initial public offerings, Bohlert said.
“Most will agree that growth in employment numbers will strengthen the economic situation, and a great way to create jobs is through new business creation,” Bohlert said. “It has been our belief that a great way to create more jobs is by making the IPO process more attainable to smaller, newly formed companies.”
Bohlert noted that a number of companies have taken advantage of provisions in the JOBS Act to go public as REITs, including ZAIS Financial Corp. (NYSE: ZFC) and Aviv REIT (NYSE: AVIV).