Stocks have come under pressure today amid concerns, and hard evidence, that a strong US dollar has cut into the profitability of US multi-national corporations, from Caterpillar to Microsoft.

It's not so much that the dollar has gone up, but the speed with which it has ascended, while a variety of lesser currencies, from the Russian ruble to the Canadian "loonie," have plummeted in value.

The economic and profit outlook is complicated, also, by the crash in commodities, emblematic not only of that stronger dollar, but also a weaker global economy, which can also restrain corporate profits and import weaker growth to the USA.

We are also starting to see evidence that the precipitous drop in petroleum prices is having a negative impact on capital spending at Caterpillar, for instance, and on oil patch employment, as energy firms announce layoffs from Halliburton to Schlumberger. Those are broad considerations the Federal Reserve should consider at its policy-setting meeting today and tomorrow.

Job growth in the energy sector may have been an outsized contributor to the drop in unemployment in recent quarters. A reversal there could slow the improvements we have seen in the labor markets, something that could push the Fed to raise rates sometime this year.

The dollar's rise should also be a factor in the Fed's deliberations. Rules of thumb suggest that a 10 percent increase in the value of the dollar, against a basket of currencies, equals a half-point rate hike by the Fed. With the dollar up 17 percent in the last year, that is equal to about a three-quarter percent rate hike. In other words, the dollar market, despite near-record low interest rates, is tightening for the Fed already.

That's enough to keep a lid on domestic inflation, if not drive it even lower by importing deflation from abroad and, potentially, slowing economic growth by eating into profits and putting the brakes on corporate hiring.

I have been of the mind that the Fed will not raise rates this year, owing to weak, if not dangerously weak, global economic activity, the stronger dollar and inflation that continues to fall away from the Fed's two percent target.

Is Smaller Better?

In this environment, buying smaller cap stocks may be a strategy that allows investors to escape the concerns of larger companies with global exposure.

Small caps, as represented by the Russell 2000, (or its ETF tracker ... IWM), can give investors exposure to the sector without having to pick small companies, which can be hard to follow without professional help.

Also, if one has a taste for overseas fare, currency hedged ETFs are the way to go, as long as the dollar seems likely to appreciate. The dollar is pausing in its rally today, but it is doubtful, given considerably lower interest rates, and rates of growth abroad, that the dollar will weaken dramatically any time soon.

Adding a little small cap, European and Japanese equities to the portfolio, which has been part of my process for months, helps to stabilize a portfolio as investors grow more cautious about the outlook for big cap, US-based multi-nationals.

True, lower interest rates, oil prices and depreciating currencies should help spur growth overseas, and here at home, but one may want to tilt the portfolio in a windward direction.

When the wind dies down, smooth sailing on Wall Street may be return ... but possibly not until a stormy winter passes.