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Middle East unrest, European and U.S. uncertainty how to find Stability in your Portfolio ?
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The fastest speed of consumer spending and increased export drove the the U.S. economy to an higher growth of 3.2% in in last quarter. Despite the good news doubts remain. This is likely not to be sufficient to reduce unemployment that remains anchored at 9.4% in December.
Jobs report on Friday and Car Sales data on Tuesday might influence the market but no major surprises are to be expected.

While a cheaper dollar fueled U.S. growth through increased consumption and exports it also helped commodity prices in reaching new highs and has been impacting negatively Middle Eastern currencies. Inflation, trough higher commodities prices, is playing an important role in this middle east unrest and an increase in rates faster than expected can happen in 2011.

Last Friday Deutsche Bank chief Economist forecasted that inflation in the U.S. is likely to double this year.

Unrest in Egypt and global inflationary risks are showing how important Gold and Commodities as Oil are in brining stability in a portfolio. Additionally, the focus from the European problems has switched to the Middle East and the overall uncertainty can increase volatility in both the European and U.S. markets.

STRATEGY: FINDING STABILITY
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In an environment of sustained uncertainty in Europe and the U.S., further amplified by the political situation in Egypt and Middle East, my recommendation is to increase portfolio investment in more stable regions like Swiss Small and Mid Cap Stocks. As the third largest Swiss bank is launching a new fund dedicated to Swiss Small and Mid Cap Stocks this is a good alternative to find some stability both in terms of currency (with the Swiss Franc) and with very competitive companies that benefit from a stable and well consolidated environment and are less likely to be impacted.

Summary:

- Inflationary pressure through commodity pricing is hitting first countries where the percentage of annual income spent on food is much higher than developed Economies. A cheaper dollar and the overall money printing has played a role in the current unrest in Egypt and the Middle East.

- With Uncertainty surrounding both the U.S. and Europe I recommend a fly to stability both in terms of currency and economic environment through swiss mid and small cap companies that are less influenced by these issues.

- I further recommend some exposure to Gold, Precious Metals and Commodities as an hedging strategy against the inevitable inflationary pressure.