Reid believes it would benefit McCarthy to get a year in the SPL behind him before thinking about leaving New Douglas Park.
Reid told Setanta Sports: "We have not had any contact from Palermo. As far as we are concerned there is no business.
"Young James will remain a Hamilton player I think this season, we hope he will."
Reid added: "If an offer comes in we will certainly look at it, but as far as we are concerned there is no offer in as yet."