Jupiter: Current threats and opportunities in the US market

Sebastian Radcliffe, Manager of the Jupiter North American Income Fund, comments on current threats and opportunities in the US market.

"Volatility has returned to global equity markets amid concerns about future earnings at US banks.

“Citigroup, one of the world's largest banks, recently reported yet more credit losses, despite many believing the worst of the recent financial debacle was over. The US housing market continues to deteriorate and this, coupled with rising inflation, is also depressing consumer confidence. However, the performance of the Jupiter North American Income Fund has been bolstered by its selective exposure to US financials over the last 12 months. Although I remain cautious on the outlook for the financial and consumer sectors, the recent share price weakness may provide opportunities to pick up stocks with solid earnings prospects and high dividend yields in these sectors at depressed valuations.

"Meanwhile, certain stocks are rising even in the current environment. Interactive Brokers, the financial market maker in futures and options, is trading close to all time highs as market volatility has led to volumes surging in their respective markets. The Fund's holdings in oil companies such as Occidental Petroleum and Halliburton have continued to add value as they rallied on the back of higher oil prices. Monsanto, the agricultural technology company, has been a star performer within the Fund over the last 12 months thanks to global crop shortage. Soaring crop prices are likely to boost demand for Monsanto's high productivity seeds further. Elsewhere, a technological edge is providing advantage for Itron, a maker of electronic meter-reading systems for utilities. The company is enjoying strong demand from overseas markets as well as within the US, as utilities aim to improve efficiency by installing Itron's meter systems.

"Outside the financial and consumer-related sectors, balance sheets remain in good shape and companies exposed to emerging market infrastructure construction in particular are benefiting from robust demand. Therefore, we believe the current market weakness offers plenty of opportunities to invest in high quality companies at low valuations."