Ashraf's Book: Currency Trading and Intermarket Analysis

How to Profit from the Shifting Currents in Global Markets

Wiley Trading Series - 2008

BUY NOW

Accolades

Chapter 1 Gold and the Dollar

End of Bretton Woods System Marks Golds Takeoff Fed Tightening and FX Interventions Rein in Gold Rally
Central Banks Gold Sale Agreements
Gold-USD Inverse Relation
Recent Exceptions to the Inverse Rule
Using Gold to Identify Currency Leaders and Laggards
Golds Secular Performance
Valuing Currencies via Gold
Golden Correlations
Dont Forget Falling Gold Production
Gold and Equities: Hard versus Monetary Assets
Gold-to-Equity Ratios
The Role of the Speculators
Gold Is Part of a Larger Story

Chapter 2 Oil Fundamentals in the Currency Market

From a Gold Standard to an Oil Standard (1970s-1980s)
Oil Glut and Price Collapse (1981-1986)
The Super Dollar of 19801984: The Worlds Third Oil Shock
World Intervenes against Strong Dollar (1985-1987)
Iraqs Invasion of Kuwait and the Gulf War (1990-1991)
The Asian Crisis and OPECs Miscalculation (1997-1998)
Oil Thrives on World Growth, Dot-Com Boom (1999-2000)
Iraq War Fuels Oil Rally, Dollar Flounders, China Takes Over (2002 to Present)

Chapter 3 When the Dollar was King (1999-2001)

The Major Theories
Annual Performance Analysis of Individual Currencies

Chapter 4 The Dollar Bear Rises (2002-2007)

2002: The Beginning of the Dollar Bear Market
2003: Dollar Extends Damage, Commodity Currencies Soar
2004: Global Recovery Boosts Currencies against U.S. Dollar
2005: Commodities Soar alongside Dollar, Carry Trades Emerge
2006: Dollar Vulnerable as Fed Ends Two-Year Tightening
2007: Record Oil Boosts Loonie, Helpless Fed Hits Greenback
Lessons Learned

Chapter 5 Risk Appetite in the Markets

Carry Trades in Foreign Exchange
Using Risk Appetite to Gauge FX Flows
The VIX
Futures Flows
Corporate Bond Spreads
Tying It All Altogether: 1999-2007

Chapter 6 Reading the Fed via Yield Curves, Equities, and Commodities

Yield Curves and the Economy
Types of Yield Curves
Rationale of Inverted Yield Curve Implications
Effectiveness of Yield Curve Signals Implications
Greenspans Conundrum Proved Bernankes Problem
Implications for Growth, Stocks, and Currencies
Tying Interest Rates to the Gold-Oil Ratio

Chapter 7 U.S. Imbalances, FX Reserve Diversification, and the U.S. Dollar

The U.S. Twin Deficits
U.S. Current Account Deficit: Old Problem, New Challenges
Adding the Budget Balance to the Mix
Financing the Deficits: The Path to Unsustainability?
Dissecting U.S.-Bound Foreign Capital Flows
U.S. Stocks and Bonds Vie for Foreign Money
Capital Flows Shift Identities
Foreign Direct Investment and M&As
How Long Will Foreign Capital Be Available on the Cheap?
Dont Ignore U.S. Investors Flows Abroad
Currency Reserve Diversification: OPEC and the Middle East
Further Currency Diversification Is Inevitable
The View Ahead

Chapter 8 Commodities Super Cycles and Currencies

The Current Commodity Cycle versus Previous Cycles
Dissecting Commodity Classes
Commodities and their Currencies
Developing World to Maintain Ripe Outlook for Food and Grains
Energy Efficiency Not Enough to Halt High Oil
Copper and Gold to Shine on Long Term Fundamentals
Commanding Heights or Common Bubbles?

Chapter 9 Selected Topics in Foreign Exchange

Revisiting Yield Curves
Is Dollar Stability a Necessity?
How Far Will Commodities Outstrip Equities?
U.S. Politics and the U.S. Dollar

Comments By Users

Deep

2008.10.27

Hi Ashraf,

Thanks for your reply. I agree with your arguments that the US consumer (may be barring UK) is in worse shape than Europe. But there is an issue of demographics that has not been considered. The population of Europe is declining so it will be hard to increase consumption. Also even though America is more impacted by the problem with CDO's and CDS's (actually I wrote a code to model CDS!!!), Europe has exposure to Central and European counties. Austian banks have huge exposures to Central Europe and Spanish banks to Latin America and presently the credit spread for Hungary, Ukraine, and Argentina are huge. With the flight to quality (presently is the time to worry about "return of capital" rather than "return on capital") there is a large possibility of emerging market crisis and we could see default of some countries. Spanish banks are suffering from a domestic loan crisis, how will they deal with a crisis in Latin America.

I am not so confident regarding the Euro. If the present economic crisis is long and severe than it could put severe strain on the Euro. May be it will last due to the political and economic capital invested in the project.

Anyway these are interesting times. I thank you again for taking the time to read my comments.

Regards
Deepankar F.R.M.

Ashraf Laidi

2008.10.24

Hi Deep,

Your agument is well made. I always thought the UK would be in worst shape than US and Eurozone. As matter of fact, in December of last year, I wrote a piece called "Sterling will be the Dollar of 2008", the same title was then used by a columnists in the FT. As for the Eurozone, the issues among the economies you mentined have always been there and will not derail the euro. My underlying thesis states that the spreading virus of CDOs and CDs is far greater and deeper in the US than in Eurozone. Yes, some Eurozone banks were hurt, but EU households werent as badly hit as their US counterpart because 1) they didnt suffer the same kind of negative home equity 2) their involvement in the stock market isnt as deep as US investors. All of these allow for better prospects for a recovery in consumer demand.

Greece and Spain have their own problems of govt debt and spain is saddled with bad home loans. But the combination of surging US budget deficit as % of GDP outpacing 7% (not 6% as many say) and reduced prospects of foreign financing that debt (especially with foreign purchases of US agencies sinking low) the is a long term negative for the USD and the US economy.

Ashraf

Deep United Kingdom

2008.10.24

Hi Ashraf,

Your website is really informative. I disagree with you on one of the articles where you had said that Europe's economy is in a better shape than USA. I still believe that USA in the long run will grow at a faster rate than Europe as a whole. Yes Europe has a capital surplus but that is mostly due to Germany not others like Italy, Spain, and Greece. I personally do not see how euro can be sustained for long due to the tensions that will develop among the different countries. Also the subprime crisis started in USA but it will have a big impact on European banks especially UBS and UK's economy which is predominantely dominated by finance industry.

That however does not mean that US economy is going to have smooth sailing. The private demand is collapsing along with investment. The government needs to engage in fiscal stimulus, government spending on infrastructure is the need of the hour instead of tax cuts which will be saved.

Please keep up the good work

Ashraf Laidi New York, United States

2008.09.21

Greg, I agree 100%. The US credit card is about to be maxed out and lenders are no longer patient. But Greg, be careful about what's goin on in Spain. The burst of the Spanish Housing Bubble is far from complete. Adios

Gregb Malaga, Spain

2008.09.19

Absolutely informative! Why don't more Americans brush up on these sort of economics instead of believing everything the Government and the Fed lie about. The invisable inflation tax from the falling Dollar and all these late bailouts and excessive liquidity flows are destroying our wealth. Wake up America and rise up!

Post a Comment regarding this article

Nick Name:
Country:
State:
City:
Write your comment below