Aliens TLDR

As the International Monetary Fund warned in a blog post, sentiment in equities and crypto appear increasingly connected, raising the “risk of contagion across financial markets.” Bitcoin’s correlation to the S&P 500 was just 0.01 from 2017 to 2019, said the IMF, suggesting that equity and crypto prices were moving independently.

Bitcoin looks similarly linked to emerging markets, with a 0.34 correlation to the MSCI Emerging Markets Index in 2020 and 2021, up 17-fold from prior years.

Crypto’s volatility is also spilling into equity markets, and vice versa, implying that “sentiment in one market is transmitted to the other in a nontrivial way.” The IMF views this as a risk to financial stability, particularly in markets where crypto is taking off.

The BOJ and European Central Bank are bucking a global trend and have said they don’t plan to raise interest rates this year, even as the Federal Reserve is expected to hike the federal-funds rate by as much as one percentage point in 2022.

The National Association of Home Builders releases its Housing Market Index for January.

The index is below its record high of 90 from November 2020, but remains elevated historically, as builders continue to be very bullish on the housing market.

ASML Holding, Bank of America, Citizens Financial Group, Comerica, Discover Financial Services, Fastenal, Morgan Stanley, Procter & Gamble, Prologis, State Street, United Airlines Holdings, UnitedHealth Group, and U.S. Bancorp release earnings.

Economists forecast a seasonally adjusted annual rate of 6.39 million existing homes sold, slightly less than in November.

The Conference Board releases its Leading Economic Index for December.