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Market rally can continue through 2017, strategist says

Don't expect the market rally to end anytime soon, strategist Jim McDonald told CNBC on Tuesday.

Stocks hit all-time highs in intraday trading Tuesday, with the Dow Jones industrial average breaking above 19,000 for the first time.

The markets have been moving higher since the Republican sweep on Election Day, which landed Donald Trump in the White House and the GOP keeping control of both houses of Congress. However, McDonald told "Power Lunch" he believes the recent run is more than just a postelection bounce.

"Breaking up legislative logjam will be helpful but the global economy has actually been gaining momentum since August. We think this momentum will continue into next year," said McDonald, who oversees $946 billion as chief investment strategist for Northern Trust.

"As long as rates don't jump too high, which we don't think they will, we think the rally can continue through 2017," he added.

One of his favorite sectors is financials, which he said will benefit from higher interest rates and the deregulation expected from the Trump administration.


Meanwhile, David Marcus, portfolio manager at Evermore Global Advisors, sees more opportunity in Europe.

That doesn't mean he is negative on the U.S. He's anticipating a more pro-growth environment once Trump takes office, with things like infrastructure spending and lower corporate rates being a "boon" to consumer spending.

"There is still a lot going on here in the U.S., but Europe is so far behind the U.S. There's so much opportunity there that hasn't been tapped yet," said Marcus, who manages the firm's Global Value Fund. The fund has 70 percent of its investments in Europe, and only 20 percent in the United States.

Among the things on the horizon in Europe are Italy's referendum on constitutional reform and German Chancellor Angela Merkel's re-election efforts, he pointed out.

While some investors may see what's happening in Europe as "scary," Marcus said that's how you get bargains.

"If it was only bullish, then it would be too expensive," he told "Power Lunch."

"I like some scary so that I can get a discount. And I would say there's going to be more volatility and the key is to take advantage of it."

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