Question. Not everyone believed it could actually happen, but a slow and steady move higher by the stock market has us still near record highs. A lot of figures think the president obaositive moan histo first half of the year is is as good as it is, the of the time,d half of the year continues higher. Recent history seems to validate that story line. According to market data and Research Firm kensho, since 1980, during the first year of a president ial term, the s p 500 is generally positive during the third quarter. And it is actually not had a losing Fourth Quarter during those time frames either. There is one sector in particular that many traders are keeping a very close eye on to set the tone for the rest of the year. The most important sector and it was las a wel is the financials. Financials will be the sector to watch. If you can get them working, particularly if theres a hint of deregulation, i think then the whole market will pull together and we can see new highs. And theres one item on the washington agenda that has all of wall street totally reform, real legitimate tax reform through. We can, its real negative. I think the most important thin go through congress. Tax reform without question. So r pha, been a noticeable absence of any volatility. While that could continue, there e big swings in the market are coming soon. One of the most notable themes of the first half of 2017 has been the lack of volatility. The vix index, which many people look at as a measure of volatility, has been extraordinarily low. We would expect that the change in the second half of the year as people begin to realize economic realities are not what they hoped they would be. Since the election and beyond, the stock market has rewarded investors with higher prices and lower volatility, but wall street experts arent letting their guard down and theyre putting earnings and the fed under the mike scope. When it comes to the economy, is me andering along, but things ahd sha things up. In the second half of 2017, september will stand out as a month to remember when it comes econom thats when the Administration Promises to deliver its sweeping tax plan, when the u. S. Might hit its debt limit and when the Federal Reserve could begin reducing its 4. 5 trillion balance sheet. By the end of the summer, we should have a bettn three critical economic gauges. First, growth. The u. S. Started the year with lackluster gdp of just 1. 2 . Accelerated the Second Quarter to 2. By september, we should know if all that post election enthusiasm has turned into post election sales at the mall and investment from companies. S are mixed. Second, the its fall b to a 16year low of 4. 3 and many say this is full employment. But it may have proven to run, especially if growth picks up, but if the rate goes too low, the fed could begin worrying about the third big item on the list. Inflation or the lack of it. Its been moving away from the feds 2 target for the past three months. Dragged down by Lower Oil Prices and a decline in communication costs. They expect inflation to pick up in the month ahead, but some are starting to get nervous. If it doesnt pick up, theyll put the kai bosch on a third this year. The best guest, growth will look like it did in the first half of the year. Its likely to average around 2 . Any impact from fiscal policies out of washington, thats a story for next year, not this one. Im steve liesman. Lets turn to our two guests for their outlook for the economy and the Financial Markets in the second half of the year. We have josh fineman and Tom Stringfellow with frost investment and visors. Im going to start with you. It looks as though things have steadied out in the economy. Were seeing steady growth. How does the second half look to you . I think the e the second hal pretty good momentum. Looks to be in good shape. Frds much of the cyclical repair has been done. The labor market is healed and it will get to the lin growth in the economy has diminished. From a cyclical perspective, i think its likely going to continue. So, tom what are you looking for in the market in the second half of the year . Its been a pretty good first half, not ju t likely to continue . What should i be watching out for . I would agree. I think its going continue. Everything that josh mentioned about the economy does play into the markets. There are some concerns weve had concerns of this first half of the year, last year, a number of sectors that cant seem to get traction or maintain traction. I think that does continue into the second half of the year going into probably 2018, theres a number of sectors that are very positive. At like what. Give me a couple of names. Continues to be a positive health care. And Health Care Technology continues to be positive. Josh. You said that there are some pitfalls though to watch for. In the second half of 2017. And maybe the beginning of 2018. What would they be . Well, i was saying, some of the structural forces, the trend were wee living a Slower Growth world. I think thats goirng to be with going to be b with us. The issue was raised earlier, policies coming out of washington, a lot of people are banking op the tax reform. I think were going to get something, but theres a risk that falters. I think thats a potential downside to watch. And then, the inflation question. Inflation has surprised on the downside. I think it is largely reflecting transitory factors, were going to need to see inflation move up further for the fed to continue on this gradual path of raising interest rates. Let me hit you with a double question here. One is domestic oriented. How concerned are you about the value of stock prices right now . Are they a little stretched . A lot stretched or roughly where they ought to be and number two, is the u. S. A better place to invest now for the second half of the year . Or should i look overseas . Good questions and spot on. Id say the stock market is a little stretched these days. For it to continue, weve got to have obvious earnings growth. If we can stay in a low inflationary environment, yeah,. Fixed income investor, but Equity Investors will appreciate e dynam between the global, the u. S. Markets are really interesting. Its going to be dependent on the strength of the dollar, where investors want to move. Do they want to come back to the u. S. , but if you look at some of the multiple the foreign markets are more attractive these days. You get the final word, where would you be putting money to work right now . I think with the Economic Cycle still having further to run, i still think risk assets equities, credit product still looks good although i agree, were a little stretched in valuations and some of that is predicated on us getting tax reform done. All right, thank you. Josh, tom, thank you both for joining us today. Thank you. Thankyou. The best performing sector so far this year has been technology. The s p tech sector etf is up double digits. Stocks like facebook, amazon, netflix, apple led the charge gain iing about 20 or more. A survey showed ha strategists believe the sector will outperform in the neblgs six just a few minutes, wellom have some Money Managers for their top tech pick for the second half of the year. Well, 2017 could be remembered as the year of the retail wreck. The sector has been a mess. Sales are most sto closing, but will the rest of the year be more of the same . Courtney reagan has more. The second half of the year is always the most is year, ther lost a lot of ground to make up. Back to school inventory is hitting store shefls in the next couple of weeks, that is if its not already out. When every year marking a time when everything has to be bo back to school items Like Computers and backpacks. Since last year was a big spending year, look for back to school sales to be below last years levels. There are also a few companies to watch. If no other bidders emerge for whole foods, a major retail focal point will be how amazon influences the grocers online business. Some are expecting immediate changes and ripple effects through retail, but amazon isnt the only behemoth shaking up its pumps history. Walmarts been on an e commerce shopping spree and there could be more. Macys is is one retailer that needs a reboot and reboost. Later this year, the ceo is go new Loyalty Program and is expanding the number of macys outlets within existing stores, which have been listen sales measurably. The Holiday Season is make or break for retail and this year, the stakes are even higher. Its the last chance for Underperforming Stores and brands to prove their worth before decisions are made about which stores will close in 2017 is already on a record pace. For nightly business report, im courtney reagan. Still ahead, Portfolio Managers with a hot hand tell us which stocks they think will sizzle. This summer and boeyond. A big theme for the stock market in the first half of the year was washington and adds johnwood reports, it will be a big theme in the second ha. The first half of 2017 has produced plenty of action for the new Trump Administration in courts at the fbi, on cable television. What it hasnt wret produced is the kind of action that americans in general and wall street in particular most want to s. Concrete action on major priority, reforming the tax system, upgrading the nations infrastructure, avoiding a debt crisis by passing an increase in the federal debt limit. Rallying supporters in iowa the other day, President Trump had some high hopes for the second half. The taxes are coming along and the heal and we have gary cohen, the president of Goldman Sachs, who loves Goldman Sachs on a slightly higher salary. Wheres gary . Hes around here some place and hes working on some incredible plans. Not only tax, but were going to be rebuilding our country. Were going to be doing things in terms of infrastructure that we need. But with a president and Republican Congress deliver . Speaker paul ryan is eager to take up tax reform next, but trumps infrastructure plan relying op tax breaks will have trouble drawing the democratic support the president needs, nor will tax reform be easy because of disagreements within the republican party. Congress cant get to tax reform until lawmakers pass a new budget. Budget is also critical to avoiding a new shutdown and raising the , h over everything is Robert Muellers special counsel investigation and if you think that makes the entire second half of the year a giant question mark, youre right. Fornightly business report, im john harwood in washington. Some of the most powerful executives in Corporate America are the chief financial offic s officers. In and where to hire. So jackie deangeles conducted a survey to see what to expect in the months ahead. Whats keeping cfos up at night . Consumer demand, Cyber Attacks and u. S. Trade policy in order. With respect to trade policy, theres some concern that the president s recent rhetoric towards germany could lead to a trade war or the entire eu. Just under 60 of respondents said theyre somewhat concerned. Regarding the global economy, the euro zone was stable, was upgraded to improving. While the u. S. Held on to the improving hitting for the fourth straight q. We asked about the stock market. 50 said yes. Will go up before we come down. Interesting where they think the markets strength is going to 40 said technology will drive the market. That was up from 20 last quarter. Financials, which was where they were placing their bets last quarter, dropped to second place. With 15 still think banks will be a bright spot. When asked how they think the fed will act for the rest of the year, a little more than half said we got our two rate hikes and we wont see anymore this year. Finatrump, theyre more pessimistic that he can pass key legislation in 2017. Overall, an optimistic, but cautious tone. With equities on a tear, weve got two of our top market monitors to join us now to talk about tech, financials, health care, the sectors and names they think will perform well in the second half of the year and beyond. Mary ann is a Portfolio Manager with gradient and Gary Bradshaw is a Portfolio Manager at hostages capital. Welcome back. Were going take a look first at your tech picks, both of you. Im going to begin with you, gary, because you have two choices in that sector. Little companies that neither of us have heard of. One named microsoft. Explain what they do and then this newfangled one called facebook. Why do you like them both . Well, with microsoft,t at t because of Cloud Computing. And its not just the Cloud Business thats reinvigorated microsoft, but windows 10 is doing well. Bing is doing good, their search engine. Because of their businesses, x box and all, their earnings are reaccelerating, so, we like m e microsoft in here, it pays a nice two plus dividend. Doesnt hurt they have over 100 billion of cash in the bank. More than ive got. Facebook b, quick thought on facebook. We think its cheap. With 1. 9 billion active monthly user, their advertising business continues to accelerate. We think theyll earn 6 next year. Theyre growing revenue us and earnings 40 plus percent put a 30 multiple on that, you come up 180 stock. We think its cheap in the market we think will continue to be good. Mary ann, you like new tannics. Rekrebtly, it had a big gain because of a deal in with google. Why do you like the stock . This is a pure play Data AnalyticsCloud ComputingSoftware Company and thats a whole mouthful, but what it does is it offers companies the ability to have all of their software talk through each other. All the other component, then send it out to the cloud, whether thats private or public. So this is a company fwroeing the top line we think that the valuation on a price to sales basis is the 30 discount to its peers and as you said wi new partnership with google. Lets transition to a couple of picks you have in health care, gary, you have one. One of which is a bio tech. Merck has a new drug which is a cancer drug. And sells are really ramping up. We think they can do 10 billi 1n by 2020. Got a great dividend of 2. 88 . Earnings are accelerated. We think its a lack Health Care Stock to own. And you two. Tyler mentioned. Alexion pharmaceuticals and i shares etf, ibb. Yes, it has really primarily one drug and its for eye diseases, rare eye diseases. Someone else believes they have a great pipeline, too. And thats the cfo whos coming over from biogen, which is much larnl larger play. We think this is a unique situation here. Also growing extremely fast and we think theres a lot of upside to this one. At least 20 upside. In terms of ib brb or the i sha bio tech etf, that the way to be invested in about 150 different companies. A lot of the companies do complete. Were a little short on time. Gary, im going to give you a pass on make ago selection in financial, ann, you like jpmorgan chase, the banks fed. Week are getting nice new you rea like this one. Yeah, with increased as you say, from both boost their dividend by 12 and also buy back shares, another form of return and capital. Thats going to be about 6 fewer shares, so we can see at least 10 upside. So muthanks very much. Coming up, the hyper loop, flying machines. They may sound far out, t likely hear much mo the world of transportation will see several big developments from how we move in a tube. Planes an perhaps e phil lebeau ek plains. Teslas ceo will be in the spotlight in the second half of the this year as the automaker makes several big moves. One will include dramatically ramping up production and the companys plant in fremont, california as tesla lawn u chs the model 3. It is aimed squarely at the mass market. Tesla is also expect ed to announce plans to expand in assembly plant. A huge move since china is the Worlds Largest auto market. And the ch is aggressively pushing adoption of electric vehicles. In the airline industry. The big question is what impact enhanced security screening will have on approximately 2,000 flig lan ng the u. S. Every day. Their speculation, tighter security, could hurt the airlines because some customers might put off Long International trips to the incon venus and serene yens and potential for more resfrik b t summer. I think we would find a way a reason. Finally, the hyper loop is is expected to take a big step closer to becoming reality. After month of working on the technology in the desert outside las vegas, hyper loop one is planning a full scale test run in tubes covering rough ly a third of a mile. Were at least twothirds the cost of hi we need much less land and we can go both aboveground or understood ground to come into city centers. The hyper loop is just one of the budding forms of transportation youll hear more ab personal flying machines. Imagine something that combines the technology of helicopters and drones, but is flown by a person at a low altitude. The first of these personal flying machines could be sold to a pay iing customer by the end the year. Nightly business report, chicago. From hyper loop to the great space race, investors shaul expect new developments and new innovations in this second half and Morgan Brennan has more. Its been a setellar year fo advances. Jeff bezos past the edge of space and elon musk launched two different rockets. But the biggest milestones are yet to come. Their big milestone is the first lawn f of their nrocket, falcon heavy. Three falcon nines glued together. That will usher in an era of more powerful rockets. The first step in a broader effort to take humans to the moon and then to mars. The next gen rocket is also in the works but the engines must first reach base they place russian ones on congress for years. Blue orgin will move production to huntsville rocket city, alabama, breaking ground on a new facility in the coming month, but its not just massive consolations of satellites. Start up one web is building its first tactry to mass produce satellites for broad band use and space ex will test its own offering as well. All this as the government looks to manage this activity. We just saw congress you know start the authorization subcommittee in Congress Vote to create a space core within the air force. That would kind of operate as an autonomous part of the air force. Kind of the way the marine corps , there needs to be some new hires. Especially from the civil side. One of the things we are all waiting for is President Trump to name a new head of nasa, to activate the National Space counsel with then set out his vision for what the civil Space Program is going to be. Im Morgan Brennan. Im not sure if im ready for personal flying machines. Or the hyper loop. The tube. Not sure im going to get in one of those tubes. Well let the other people do it first. Thanks for watch iing this specl edition of nightly watching have a great evening and holiday, everyone. 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