The banks have been inching higher over the last few weeks as investors are now starting to anticipate the end of the Fed's quantitative easing (QE) program in October, which will likely lead to higher rates. The U.S. economic news has slowly been improving. Today's consumer confidence number was the highest since October 2007. It easily offset the volatile durable goods report, which fell more than expected (excluding record Boeing (BA) orders).
Manufacturing seeing signs of green shoots (especially the nonresidential part of the economy as measured by the new highs in the Dodge Momentum Non Residential Index and the Architectural Billings Index). Housing is also improving -- housing starts rose 15.9%, year over year, with the key metric being the 8.3% rise in single family. Existing home sales improved 2.8%, which was partially offset by new home sales, which were an underwhelming 412,000 (annualized rate). Consumer are remaining "choosy" -- buying either autos or houses or soft goods -- although definitely not all three at the same time.
We await lower jobs and higher wages (the JOLTS (Job Openings and Labor Turnover Survey) data were encouraging on both fronts last week). Still, there is an underlying improvement in the economy to supporting close to 3% GDP growth for the second half of the year.
I have written about several financial names in my blog, and another one has caught my attention. Southwest Bancorp (OKSB) is a small-cap regional bank with 22 branches in Oklahoma, Texas and Kansas. It has $1.3 billion in assets, $1.3 billion in loans and $1.5 billion in deposits. Historically, the company has focused on consumer lending. However, during the financial crisis, it had to book more than $100 million in mortgage losses. Then the company got religion -- with new management and a new customer focus -- and started doing more commercial and industrial lending, namely in the health care and energy fields.