US Financial Outlook Considerably Stronger Than You’d Assume

Dave:We hear quite a lot of detrimental issues in regards to the US financial system or not less than quite a lot of social media and let’s face it, the common media pushes quite a lot of doom and gloom tales about what’s happening fiscally and economically on this nation. However at present we’re going to take a step again and take a look at how the USA financial system at present in late 2024 compares to the remainder of the world and we’re going to be bringing on top-of-the-line economists and forecasters within the nation to share what he thinks is in retailer for the broader American financial system, not only for this 12 months, however properly into the long run.

Dave:Hey everybody, it’s Dave. Welcome to On the Market, and at present we’re going to be joined once more by Joe Brusuelas. He’s been on the present earlier than speaking in regards to the International Financial system Tremendous widespread present, so we introduced him again on. Should you don’t bear in mind, Joe is the principal and chief economist as RSM. He’s been named top-of-the-line financial forecasters on the market by Bloomberg, and at present we’re going to speak to him about the place the US sits globally and the way we stack as much as different economies. We’ll discuss China’s financial slowdown. We’ll discuss in regards to the battle within the Center East and what that would imply for oil costs. We’ll additionally get Joe’s tackle the most important financial dangers going through the US and his prediction on the place fed charges will land within the subsequent 12 months, and I’m going to present you a bit little bit of a spoiler. Joe has a refreshingly optimistic however very candid view of the US financial system and he understands it in addition to anybody. He’s received quite a lot of knowledge, info, expertise to again up his opinions and in the event you’re like me, you’ll like what he has to say about the way forward for the US financial system. With that, let’s carry on Joe.

Dave:Joe, welcome again to On the Market. Thanks for being right here at present.

Joe:Thanks for having me on. It’s at all times good to speak to you, Dave.

Dave:Nicely, we don’t at all times discuss in regards to the world financial system right here and in the marketplace, so I feel it could be useful in the event you might perhaps simply give us a abstract of the worldwide financial system and type of the place the US sits by way of competitiveness, development, inflation, all the important thing indicators. How does the US stack up towards the remainder of the world proper now?

Joe:Okay. Nicely, I assume two issues. The primary is is that now we have seen the primary tentative steps of what we will name the worldwide restoration. It could seem that the preliminary worth shock attributable to the shutdown of provide chains in the course of the pandemic has now ebbed. Central banks have seen the financial system start to get better they usually’re now engaged in a close to synchronized set of central financial institution price cuts. Whereas development is just not going to be spectacular, it’s going to be strong most likely into three to three.2% selection for your complete 12 months. Now, the USA, due to the mixed fiscal and financial firepower put to work in the course of the pandemic emerged first, and what we’re seeing on this first section of the put up pandemic financial system is that the USA is wanting loads stronger its development price by means of mid-year 3.1% on a 12 months in the past foundation. Dave, we spent quite a lot of time fascinated about the actual financial system in my enterprise and actual last personal demand that’s the perfect proxy for the financial system.

Joe:It’s up 2.6% and it’s been pegged there for higher a part of a 12 months now. So the USA financial system is doing fairly properly even because it cools into the tip of the 12 months not simply development but in addition inflation as we communicate. The general inflation price, the underlying inflation price’s round 2.5%, maybe a bit decrease, and once more, the US is simply merely outperforming its G seven friends. What’s most necessary is that previous to the pandemic, US attracted about 18 to twenty% of capital flows all over the world popping out of the pandemic. It’s greater than 30%, and one will get the sense that the mixed affect of US industrial coverage as coverage designed to assist toddler industries like synthetic intelligence and to ensure that the taking part in area with respect to commerce is leveled out along with the availability and chain resilience insurance policies which were put in place and the primary steps in direction of a extra sustainable set of environmental insurance policies all are working to draw capital from all over the world.

Joe:Furthermore, since 2021, in our personal inside surveys, we might see a transfer by corporations to start substituting very subtle know-how for an absence of labor. That lack of labor was attributable to the long run demographic adjustments that have been going by means of, the grain ageing and exit of the child boomers from the workforce, after which additionally an extended interval of funding in know-how that’s now starting to reap and beneficial properties. Now, it’s attention-grabbing, it doesn’t fairly embrace synthetic intelligence, however the level is now that that lengthy interval of funding is actually starting to repay US productiveness is up 2.7% on a 12 months over 12 months foundation. That’s the perfect. Because the interval of 1995 to 2004, the USA comes, it’s simply outperforming, however that enchancment in productiveness, that’s the magical elixir, the key sauce if you’ll,

Joe:That enables the financial system to develop quicker, have a decrease unemployment price and worth stability. Proper? Ought to we proceed to see this and I feel we are going to as a result of we’re simply seeing the tip of the spear round synthetic intelligence. It’s going to alter the underlying construction of not solely the USA financial system however the world financial system going ahead. There are good and nice issues occurring throughout the American financial system, and it’s good that we discuss them as a result of too many instances the doom and gloom crew on the market have the initiative. It’s at all times simpler to sound smarter while you’re being hypercritical or stating the shortcomings about what’s happening available in the market or the financial system, however I received to inform you what we’re seeing right here. The baseline means that we’re going to be onwards and upwards with this financial system for a lot of years, and that’s a very good factor to speak about.

Dave:I adore it. Yeah, I imply, I really feel like we hear quite a lot of negativity in regards to the financial system, however a lot of the info means that the US continues to be actually aggressive, even within the gentle of seeing quite a lot of recession warnings, labor market softening. I feel there are some broader developments that you simply’ve been seeing. One query I need to ask although, is the US outperforming as a result of we’re at a interval of energy or are a few of the beforehand robust rivals like China simply type of fading away?

Joe:Nicely, I feel it’s a bit little bit of each that a few of the challenges to the financial system across the pandemic have simply ended, proper? The financial system’s normalizing now on a 12 months in the past foundation, we’re up 3.1% by means of the center a part of the 12 months, and that’s not going to be sustainable. We’re going to maneuver again to a pattern slightly below a 2%, proper round 1.8%, in order the financial system cools, it is best to count on to see demand for hiring. Cool. Keep in mind a 12 months in the past the unemployment price was 3.4%, okay? That’s too low. Out of 2022 into early 2023, the financial system was vulnerable to overheating, proper? The truth that we’ve been capable of obtain that gentle touchdown, in different phrases, are nonetheless in full employment with the financial system cooling and worth stability returning means we’ve achieved the aims of the exit from the pandemic. The financial system didn’t crash. Now, I do know that there’s an enormous doom and gloom crew on the market for 2 years they’ve been predicting recession in a sure level. It’s like being a damaged clock. That’s proper. Twice a day, proper? They’ll be proper finally, nevertheless it doesn’t seem like the financial system is vulnerable to recession or will probably be falling into one within the close to time period, and it’s unlucky that that discourse achieve predominance in some quarters as a result of there are rational traders and good hardworking people who find themselves actually lacking out on what’s occurring proper now within the financial system.

Dave:We’ve to take a fast break, however extra from Joe Bruce Suela once we return. Welcome again to On the Market. Since we do discuss extra in regards to the American financial system on the present and you’re an knowledgeable within the world financial system, I’d like to only contact on a few of the main storylines within the world financial system as a result of to me what you’re saying in regards to the American scenario is smart. The variable that makes me a bit anxious is simply type of like a black swan occasion as a result of it simply looks as if there’s a lot geopolitical instability proper now. So what are the principle tales on a geopolitical world financial system stage that you simply suppose are necessary at present?

Joe:Nicely, at the start, it’s the function standing and dangers across the folks’s republic of China. China for near 30 years noticed close to double digit price development on a median foundation. Nicely, China’s REITs, what economists would name a center revenue entice, that their enterprise mannequin, that was the first driver in development modernization, large funding in industrial, residential actual property, after which subsidizing industries grow to be an export oriented development mannequin have largely come to an finish. That mannequin goes to be required to alter, it’s going to want to evolve, however due to the distinctive political financial system of the PRC, you may have an authoritarian authorities on high of a market financial system underneath sure situations that may be very troublesome, and people situations are starting to approximate. China’s true development price’s most likely slowing to someplace round 2%. It’s home financial system, its family tempo of consumption has slowed considerably why they’re going by means of a basic debt and leveraging cycle altogether.

Joe:Not too totally different from what the USA went by means of between 2007 and 2014, and sadly with the Japanese financial system went by means of over a interval of a long time beginning within the early Nineteen Nineties till very just lately, and we’re undecided how that is going to evolve. Proper now, the Chinese language home political, fiscal and financial authority appears completely reluctant to reflate the home sector. By that I imply they should switch incomes from companies to households as a way to get that financial system shifting in as a result of they’re unsure across the true situation of the underlying monetary sector. Furthermore, as a way to maintain issues shifting as a result of what the Chinese language actually worry is a rise in unemployment and B, a rise inflation, they’re trying to export the burden of adjustment to its commerce companions. What meaning is the Chinese language have directed that the political authorities directed the monetary sector to reallocate threat capital to manufacturing. Proper now, China’s received an incredible oversupply of products and since they need to make their commerce companions take in their adjustment by principally telling them, you’re going to have to just accept a smaller share of worldwide manufacturing as we export our surplus capability. Now, Dave, if this was 1995 and even 2005, your complete world would’ve stated, yeah, we’ll do this. Proper?

Dave:Why would they’ve accepted that?

Joe:As a result of on the time we might’ve thought that this was a part of binding China to an present world order that it had a stake in in order that it could not search to overturn that order.

Dave:Clearly,

Joe:That didn’t find yourself the way in which that policymakers 30 or 40 years in the past thought. So we’re in a really totally different interval the place the most important economies, the US, Europe, the united kingdom, Japan, South Korea, Australia, are clearly not going to just accept a smaller share of worldwide manufacturing. That’s why we’ve seen the tariffs, the commerce wars, the geopolitical tensions which have clearly spilled over. I imply, the first goal of US industrial coverage is to restrict the capability of China to imagine and set world requirements round electrical autos and round subtle microchips. Furthermore, it’s to guard our toddler synthetic intelligence trade and quantum. So there’s loads there. The 2 outs at no cost commerce are nationwide safety and toddler industries. The US has declared each. That’s why we’ve seen a change within the construction of the worldwide financial system, capital flows, by way of commerce. So we’re going to be in a interval of some stress for a very good time over China’s over capability and its try to export its burden of adjustment to its commerce companions.

Dave:Are you able to say a bit bit extra about that, Joe, as a result of I’m curious what potential impacts on the US financial system there are from this case in China?

Joe:Nicely, it’s loads lower than it could’ve been a lot of years in the past. Every quarter you possibly can open up what’s referred to as the ten Qs and take a look at the steadiness sheets of the banks and see their publicity to totally different economies. Over the previous variety of years, the large banks have started to scale back their publicity to PRC, and that lessens the likelihood that contagion from an actual disaster in China would movement by means of the monetary channel. However the level is, in the event you’re a forward-looking investor and also you’re anxious about threat, you possibly can open up the ten Qs of the 100 or so systemically necessary monetary establishments, the large banks all over the world and see what the publicity is. There’s much more transparency than you’ll suppose given the neo conspiratorial discuss that masquerades is typical knowledge in some quarters.

Dave:Obtained it. Nicely, I haven’t even heard of that, however I’m guarantee reassured a bit not less than that you simply really feel that almost all American banks or western banks are most likely not tremendous uncovered. I’m curious although, shifting on from China, in the event you suppose there’s restricted threat coming from China proper now, are there different geopolitical conditions evolving that you simply suppose do pose a much bigger threat or a much bigger alternative to the US financial system?

Joe:Okay, so after I take into consideration the worldwide financial system, proper, as a result of my principal valley Wix see American financial system, however like all people else for the reason that nice monetary disaster, you needed to grow to be an knowledgeable on world economics as a result of it’s an interdependent, globally intertwined built-in financial system. When you consider world economics, you begin with commodities and power at all times and in all places first. Then you definitely transfer to industrial manufacturing due to the tumult within the Center East, and we’re now 10 months into the newest battle between Israel and its antagonists. Nicely, you do take into consideration the worth of oil. Now my sense right here is that the USA, the Norwegians, the Latins have all stepped up manufacturing proper now. We’re awash in a sea of oil globally, and there’s extra coming on-line because of what’s happening in Africa and even a few of the rehabilitation of a few of the states within the Center East. So proper now, I’m not too involved a couple of worth shock through the oil channel, however one at all times must be involved about occasions within the Center East spilling over right into a wider conflagration that entails the Israelis and the Iranians and their supporters. In order that’s the opposite main threat on the market, I feel proper now.

Dave:Obtained it. Okay. And that threat would come to the US largely by means of oil costs,

Joe:It by means of the oil channel. Now, it’s necessary that we put this within the correct context, proper? The US is the main producer of oil on the earth now. It’s self-sufficient in the case of power. We truly produce extra oil than we use, so we’re now exporting it. You may need observed gasoline costs this 12 months, Dave. They’re down virtually 9% from the height in April, and I took a take a look at wholesale gasoline futures as a result of earlier than we got here on, as a result of I assumed we is perhaps speaking about this, we should always see one other 6% decline in gasoline costs, and that merely has to do with the tempo of home consumption. We grow to be extremely environment friendly in our home oil and power enterprise. The identical corporations that produce oil start to put money into renewables a couple of decade in the past, and it’s beginning to bear fruit, however nonetheless, the worth for oil set globally, if there’s a disruption in provide of the Center East, it is going to hit our commerce companions and invariably that can affect us. In order that does stay to me that it’s the second greatest threat on the market of a black swan if that’s the way you need to increase it to the worldwide

Dave:Financial system. Thanks for explaining that. I feel these are two world conditions that I and our viewers can wrap our heads round. So let’s simply return again to the us. You appear bullish on the US financial system. What’s your for the remainder of 2024 and into 2025, what ought to we count on?

Joe:Nicely, we count on to see long-term pattern like development for the second half of the 12 months and into subsequent 12 months, which means proper round 2% with some upside threat. There’s an incredible fiscal tailwind behind the US financial system having to do with the rebuilding of its infrastructure, the availability chains. We’ve a type of new chip factories about 20 miles from the place I stay. You must see it, Dave. It’s improbable. You bought to go? No, I received to go. Yeah. I’ve been capable of tour the manufacturing facility right here in Texas and the 2 out in Arizona. Cool. You recognize what it’s prefer it simply as an apart, again within the nineties, we used to play this sport referred to as Sim Metropolis. You type of construct civilization, proper?

Dave:Oh, I do know it. In fact,

Joe:You may exit Tyler, Texas and watch round Tyler how civilization is being constructed from the substructure that’s being put in to assist the whole lot to the highways, to the townhomes, the condos, the only household residences, and all the way of life facilities which might be springing as much as assist all this, proper? I’m truly speaking to a agency in Europe that’s fascinated about investing in wealth administration in Tyler, Texas to anticipate the explosion of the growth across the constructing of those fabs. Wow. That’s why one of many elements and the reason why I’m very bullish on the ahead look across the financial system, since you’re going to see not solely central Texas, not solely Phoenix, Scottsdale, however you’re going to see Ohio and upstate New York, Columbus, Ohio on the world on Cornell and upstate New York be the recipient of funding as a result of primary choice by the USA to create resilient provide chains round essentially the most superior and complex know-how, and I’m anticipating we’re going to see extra of this second with the US unemployment price sitting round 4.3 now.

Joe:We predict it’ll end round 4 and a half on the finish of the 12 months. That’s traditionally low inflation is ebbing, which meaning actual incomes are going up. For the previous 15 months, the common employees seeing a rise of their incomes over inflation. The argument we’re having with one another about grocery costs, when you account for hours labored and revenue above inflation, grocery costs, what it takes to work or to pay for every week’s of grocery costs is correct again to the place it was in 2019. Now, that’s nothing. I’m going to go stand in entrance of a college board with the PTA and inform them, proper? Individuals throw eggs and tomatoes at you, they merely gained’t imagine you but it’s empirically true and over time, economics has a humorous manner of trumping ideology and politics and that actuality will happen as a result of every family is continuing by means of the adjustment put up inflation shock differently.

Joe:Some have already made their adjustment and moved on, others are within the midst it and others, it’s going to take some time, proper? There’s no two households which might be alike, however I’m assured that that adjustment will happen. We’ve received a dynamic financial system that’s rising. It’s changing into much less fragile by the day as we harden these provide chains, as we transfer in direction of a special steadiness by way of the general financial system, sure, there are dangers. There are at all times going to be challenges and there are at all times going to be issues, however to me, the financial system seems to be prefer it’s on a way more sturdier basis than it did in 2019.

Dave:Wow. Joe, you’re getting me fired up in regards to the American financial system. I like this optimistic view. Time for one final fast break, however after the break, we’re going to listen to from Joe on his predictions in regards to the US financial system and the place the Fed funds price would possibly land within the subsequent 12 months. Hey, traders, let’s soar again in. You probably did say there’s dangers although, so what are the dangers that you simply see?

Joe:Alright, properly, we clearly have had a structural change in how and the place we work between 20 and 30% of us work from home and work from home completely. That’s prompted a problem in industrial actual property.

Dave:Certain has.

Joe:I used to be simply studying a narrative this morning about how within the main metros, there’s a juxtaposition that’s fashioned within the class, a industrial actual property sector. The newer buildings with the facilities and the know-how, they’re full. They’re over capability

Dave:Workplace area, you imply?

Joe:Workplace area? Yeah. The older workplace area that doesn’t have that, these capabilities, there’s some actual issues. Now, one doesn’t need to low cost the monetary exercise that’s going to go on in industrial actual property. Certainly in 2023, March, April. Keep in mind the mini disaster across the state and native banks,

Joe:There are banks which might be going to fail. They’re going to be issues. Nearly all of these notes are held in these state and native banks, and it’s going to take some time to work by means of that. Nonetheless, it’s not a systemic threat. It’s extra of an area financial threat, however that’s a part of it. Second, there’s a wall of maturing company debt. It’s going to must be handled over the following two to 3 years. It’s about $3 trillion in debt. It’s the debt that was issued on the backside of the pandemic 20 20, 20 21 when rates of interest have been very low. So consider 800 million that was issued close to 0% in actual phrases, properly, most company money owed 5 years. We’re going to maneuver into the primary classic that’s 5 years outdated and it’s going to must be rolled over. Nicely, let’s say it was issued at 2%. Nicely, we’re going to roll that over. It’s going to be nearer to 5 to eight%. Is it going to be 800 million? No, it’s going to be extra like 500 million.

Dave:Yeah. Can I simply soar in Joe and clarify to everybody what this implies for individuals who don’t know company debt, similar to the US can difficulty bonds to boost capital companies difficulty debt.

Joe:That’s proper,

Dave:They usually have been getting it tremendous low-cost similar to everybody else was getting tremendous low-cost debt in the course of the pandemic, and it seems like what you’re saying, Joe, is that companies are going to need to reissue this debt. They want the working capital, however at a better price, which I assume impacts their cashflow.

Joe:That’s proper. So not like you who would possibly’ve purchased a home and had a 30 12 months fastened mortgage, the speed gained’t change till you promote it.

Dave:Yep.

Joe:Firms usually tackle debt in a 5 12 months increments or much less, so each 5 years they should roll over that debt and refinance it. So let me make it actual easy. An $800 million mortgage by a big agency taken out at 5% in 2020 will seemingly be rolled over, however not at those self same phrases. It’ll most likely be extra like 500 million at 8%, let’s say. Proper? Simply to make it straightforward to get your head wrapped round it, okay. Into the hole, that 300 million that must be funded, personal fairness and personal credit score will step in, which is why we at all times need to be certain that we all know what’s happening and the well being of personal fairness and personal credit score. That’s one thing that would trigger a slowdown in hiring and a slowdown in general financial exercise. Now, having stated that, as a result of I outlined the dangers industrial actual property and the maturity wall of debt that’s going to must be rolled over the functioning of American capital markets during the last 12 months has been nothing wanting vital. We simply haven’t seen an actual drawback rolling over that debt within the monetary exercise from the industrial actual property sector, and it seems to be to me with the Federal Reserve starting to embark on its price reducing cycle right here in September that we’re going to have the ability to do this too, and I feel we should always discuss a bit bit about that price reducing cycle as a manner of coming again full circle to the beginning of the present

Dave:Earlier than we go into the speed reduce cycle, which I do need to discuss. We’ve been listening to and speaking about on the present rather a lot, this impending adjustment correction reckoning in industrial actual property. Why has it taken so lengthy?

Joe:Okay, so it’s in nobody’s curiosity both the folks holding the loans or the entities which have to interact in a disorderly panic. Second, US financial system’s $27 trillion. It’s an enormous, enormous dynamic animal. These massive sums, about 101 and a half trillion {dollars} was the estimate that needed to be rolled in CRE originally of the 12 months to the mere mortal. That appears, oh my god, that’s enormous. That’s going to trigger a recession. No, it’s not. It’s merely not massive sufficient. It may trigger issues in sure localities the place the non-performing loans put constraints on native banks to assist regional financial exercise. Yeah, I feel North Texas, proper? We will see issues slowing down in North Texas. It’s within the Dallas Federal Reserve’s Regional Survey. You may inform that the elevated interval of rates of interest mixed with the power or constraints round these native banks to make loans because of the truth that they’re holding a big portfolio of non-performing loans or semi non-performing loans is inflicting a few of these areas to decelerate, nevertheless it’s not adequate in and of itself to trigger a systemic drawback or to trigger the general financial system itself to decelerate.

Joe:I’m simply sufficiently old to recollect the financial savings and mortgage disaster of the Eighties and Nineteen Nineties that contributed considerably to what was the tip of the large Reagan Eighties period growth. This simply isn’t that.

Dave:All proper. Nicely, I assume we’ll have to only wait and see the way it performs out, however I’m glad to listen to that you simply don’t suppose it’s going to trigger some systemic shock. Very last thing I need to chat with you about right here at present, Joe, is what you alluded to earlier, the fed decreasing cycle. Inform us what you make of the Fed’s place proper now and the way it would possibly play out over the following few years.

Joe:Okay. On the Jackson Gap Financial Symposium, the Federal Reserve chairman Jay Powell was very express. It’s time for a coverage pivot. Rates of interest are going to begin to come down now. Proper now, the federal funds price sitting between 5.25 and 5.5%. We count on that we’re going to get a string of 25 foundation level price cuts. The chance is that they might be bigger if hiring slows or there’s one thing going flawed within the exterior financial system that impinges on the home financial system. It’s not a lot the primary price reduce that issues or the second or third, it’s the vacation spot. Now, we expect primarily based on our, what’s referred to as estimation of the response operate of the Federal Reserve or the estimation of what’s the optimum rate of interest given prevailing situations within the financial system, will trigger the Federal Reserve to decrease that by about 200 foundation factors to round someplace between three and three.5%, and we expect they’ll get there within the second half of subsequent 12 months.

Joe:That’s going to offer fairly the increase to the home financial system. It would permit one to refinance their mortgage price in the event that they purchased a house during the last 12 months, 12 months and a half, refinance auto charges. Should you’ve taken out a mortgage during the last two years, it is going to decrease the rate of interest cost on revolving debt. It would assist the federal authorities to roll over debt at cheaper charges. As these charges come down, you’ll see what we name the time period spectrum of curiosity. Charges from two to 5 years reset decrease. We predict the entrance finish will reset a lot decrease, and in the event you’re a client, you need to watch that 10 12 months price. In fact, in the event you’re in enterprise and also you want capital to develop your corporation, you need to focus like a laser being on what’s referred to as the stomach of the curve from two to 5 years generally, and that 5 12 months specifically at present, the US 5 years buying and selling at 3.65%.

Joe:Okay, you’re a agency. You need to take out 100 million {dollars}. You need to develop manufacturing and go rent folks. Okay, good. Try this. Why? Nicely, 3.65%, you need to much less out the inflation price, two level a half. Meaning the actual price of return is 1.15. Because the time period shifts decrease, it is going to value you much less to develop your agency through American capital markets. That’s a essentially good factor. We’ll put a ground into the financial system, we’ll put a ceiling on high of how excessive unemployment can go, and principally, Dave, we’re all going to lastly get on with it. We’ll be capable of look again and rear view mirror and say the pandemic period is definitely over.

Dave:Wow. You’re painted a reasonably image, Joe. I prefer it and I hope you’re proper, however you’re clearly very knowledgeable opinions right here, and I hope that for all of us that this optimistic view of a rising secure, such as you stated, dynamic American financial system is strictly what we’re going to get. Joe, thanks a lot for becoming a member of us at present. We are going to put hyperlinks to Joe’s analysis, his contact info within the present notes as we at all times do. Thanks for becoming a member of us at present, Joe.

Joe:Thank You, Dave.It was at all times a pleasure

Dave:Available on the market, was created by me, Dave Meyer and Kaylin Bennett. The present is produced by Kaylin Bennett, with enhancing by Exodus Media. Copywriting is by Calico content material, and we need to lengthen an enormous thanks to everybody at BiggerPockets for making this present doable.