5 Things You Need to Know to Start Your Day

UBS brings back crisis-tested leader Sergio Ermotti, investors weigh the risk of Treasuries and Alibaba’s market value soars $30 billion aft [View in browser]( [Bloomberg]( UBS brings back crisis-tested leader Sergio Ermotti, investors weigh the risk of Treasuries and Alibaba’s market value soars $30 billion after a shakeup. — [Kristine Aquino]( UBS redux [UBS is bringing back Sergio Ermotti as chief executive officer](to oversee the historic acquisition of Credit Suisse Group, replacing Ralph Hamers after just over two years. Ermotti, currently chairman of Swiss Re, led UBS from 2011 to 2020 and steered the bank through the aftermath of a rogue-trader crisis by getting rid of much of the fixed-income trading business, shrinking the investment bank and increasing the focus on wealth management. “The board decided in the round, balancing everything up, that for the next phase of this singularly most important and complicated transaction, Sergio would be the preferred executioner,” UBS Chairman Colm Kelleher said at a press conference in Zurich. Treasuries risk [The latest US banking crisis reveals a surprising cause: US Treasuries.]( Silicon Valley Bank found itself in a position where it needed to sell Treasury holdings, as well as mortgage bonds backed by government agencies, at steep losses — driven by the Federal Reserve’s fastest rate-hiking pace in decades — after its clients started yanking out their money. “We always refer to Treasuries as the world’s safest asset,” says Paul McCulley, the former chief economist for Pacific Investment Management Co. “That’s from the standpoint of credit quality. That’s not from the standpoint of asset price stability. There’s a huge difference.” Alibaba shakeup [Alibaba shares soared more than 16% in Hong Kong](and added more than $30 billion to the company’s market value after Tuesday’s announcement that it plans to split its $220 billion empire into six units that will individually raise funds and explore initial public offerings. The company’s overhaul could serve as a template for a a restructuring of China Tech that achieves Beijing’s aim of carving up the country’s tech titans while unlocking potentially billions of dollars in pent-up shareholder value. “For Beijing, it addresses the concern over the abuse of monopolistic power by internet behemoths,” Evercore ISI analysts Neo Wang and Gin Wang wrote. Upbeat markets S&P 500 and Nasdaq 100 futures climbed 0.9% as of 5:51 a.m. in New York. The dollar pared earlier gains, leading to mixed trading among Group-of-10 currencies. Treasury yields fell across the curve, mirroring moves in UK and European bond markets. Oil rose while gold fell, and Bitcoin advanced more than 3%, set for its best performance in more than a week. Coming up… At 7 a.m., we’ll get mortgage applications data, followed by pending home sales at 10 a.m. The Federal Reserve of New York’s Head of Supervision Dianne Dobbeck speaks to bankers at 8:05 a.m., while Vice Chair for Supervision Michael Barr testifies before the House Financial Services Committee at 10 a.m. What we’ve been reading Here’s what caught our eye over the past 24 hours: - Global stocks rally as tech gains overshadow bank woes: [Markets Today]( - [`AI whisperer’ jobs command $335k a year]( and lure liberal arts grads - [A €5 million bet]( on Deutsche Bank’s credit default swaps draws scrutiny - The champagnes with investment [returns that beat the S&P 500 and gold]( - [McKinsey starts cutting 1,400 jobs]( this week in a rare round of cuts - [Miami, Tampa and Orlando](lure homebuyers fleeing New York - Life inside [the world’s smallest football league]( And finally, here’s what Joe’s interested in this morning The last year-and-a-half has been brutal for the tech industry in a way that it hasn't seen in over 20 years. But as we've said about a million times, there's a disconnect between the headlines you see about layoffs at this or that FANG or startup, and what's happening at the macro level. What defines this economic expansion is that it's bottom up, not trickle down. It's consumer strength, particularly in the middle and lower levels that keeps it going. And so the question is, does the recent implosion of the tech industry's favorite bank (SVB) change this dynamic at all? We know it's changed the rate outlook, but other than that, does it have any effect on the overall trajectory? Yesterday [Samuel Rines]( at Corbu ([who we recently had on the podcast]() came out with a new note and says nothing has changed. Middle America is still booming. Companies are still finding themselves capable of pushing prices higher and higher. There's still plenty of heat. Here's Rines: "While it is popular to make broad statements about the death of the consumer, justifying it against what companies are saying is problematic. Carnival is not the most expensive cruise line, and this is not a signal of the `luxury consumer.’ It is a signal of Middle American spending. Middle America does not care about SVB or SI or FRC. Middle America sees higher wages and job postings everywhere. Which leads to a confidence in being able to book that cruise." In fact, on Carnival's earnings call on Monday, the company's CFO David Bernstein said that as of right now, the recent "volatility out there... has not shown up in our business." And to Rines' point about higher wages and job postings everywhere. Yesterday we got the latest Consumer Confidence report from the Conference Board, and it showed the public perceptions about the strength of the labor market are still at levels higher than their pre-pandemic peak. It's just one company (Carnival) and one data point within the Consumer Confidence survey. But still. It may end up being that SVB's collapse is part of the old story (tech industry, not really connected to economic momentum) rather than the start of a new story (banking stress leading to broader economic stress). Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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