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A $1.2trn fund backs US stocks, but don’t look for clues in this year’s earnings season

Jim-Macdonald

Investment giant Northern Trust said it is backing US stocks to outpace other markets around the world because of the $2.3trn rescue package introduced by the American government.

Jim McDonald (pictured), chief investment strategist at the £1.2trn Chicago money manager said, the huge bailout measure signed off by US President Donald Trump, combined with the prospect of more to come if needed, left America primed for growth when the coronavirus pandemic is passed.

McDonald, who has more than four decades of experience in financial markets, said: “The U.S. has had the most cohesive, immediate and sizable policy response, and that is what has underpinned our favoring of US equities.”

However, he said the current earnings season would offer few clues as to which direction the economy would take off in. What was more important is that day traders should understand how the economy will get back on its feet as restrictions ease.

“This earnings season is not going to get us there,” he said in a phone interview with Bloomberg News. “There will not be enough information to have confidence in what the 2021 earnings number should be.”

Jim McDonald

While several stocks trading on U.S. exchanges have regained more than half of losses from March low, McDonald says many companies are still not in a position to provide the full-year guidance but betting that the fiscal stimulus and monetary measures from the US government will be large enough to offset stock market hits inflicted by the virus.

Jim McDonald

The chief investment strategist forecasts that Nasdaq 100, which has pared all the losses year to date, will perform well in the coming days on the back of the strong performance from technology giants.

McDonald spent a decade in research at Dutch bank ABN Amro before joining Northern Trust in 2001. He started his career at in 1981 with professional services firm Arthur Andersen & Co, based in Detroit

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

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