Just days after Mitt Romney picked budget expert Paul Ryan to be his running mate, Bruce Bittles — a familiar face to many in Nashville and now the chief investment strategist at Robert W. Baird — told a local audience the national debt is the biggest cloud over the U.S. economy.
Bittles, a former senior J.C. Bradford executive who was back in town this week to speak to Baird clients, says many states, municipalities and households have begun tackling their debt issues. He says there needs to be a cap on federal spending and a much more defined energy policy focused on natural gas to set things back on the right track nationally.
Bittles said he hears a lot of frustration in the questions he is asked about the economy and the investment markets. It won't be long, he predicted, until a groundswell removes many Washington insiders from their jobs.
"We're seeing it take hold this year and it will gain more traction in 2013," Bittles said. "I believe this is a grassroots movement that is seeing in real time what is happening in Europe and what could happen here soon. We've admitted we have a problem, but that may not mean much yet in Washington."
Until that changes and federal policies have produced meaningful results, Bittles said investors should stick to safe plays with large dividends. Those names include industrial, technology and health care companies. The latter sector will do well in the coming years, he added, although the hospital stocks that call Nashville home could struggle in the short term if Romney is elected president.
But, Bittles said, the big picture needs to provide more certainty to investors and companies alike in order to get the economy back on a solid growth path. And episodes like last month's exhortation from Sen. Charles Schumer telling Federal Reserve Chairman Ben Bernanke to "get to work" because Congress won't be able to get the job done will only further swing public opinion against the Washington establishment, he said.
"We need leadership like that of Paul Volcker when he broke the back of inflation," he said. "It always come back to the debt. If you don't believe that, take a look at Europe today."
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