Crypto News: 5 things to start your day

Good morning. Swiss regulators' backing of UBS's new CEO, the next phase for Alibaba and one more rate hike by the Fed. Here's what people are talking about.

Swiss regulators encouraged UBS's move to bring back Sergio Ermotti as CEO to ensure a smooth integration of the bank's recent takeover of rival Credit Suisse, people familiar with the talks said. Government officials urged UBS to consider appointing a Swiss banking heavyweight to run the combined bank during the weekend when the rescue deal was negotiated. Swiss companies have typically been encouraged to keep a Swiss native as a top executive or key board member. Ermotti's return restores that to the highest level at the nation's now megabank.

Alibaba Group will consider gradually giving up control of some of its main businesses, after completing a major overhaul to create six new companies that may debut on public markets. China's online commerce leader unveiled plans this week to split its $250 billion empire six ways, a historic restructuring that frees up divisions from e-commerce and media to the cloud to operate more autonomously and seek initial public offerings. CEO Daniel Zhang hosted a conference call on Thursday to explain the changes, but declined to specify a timeline for any IPOs except to say they will evaluate market conditions.

Federal Reserve Chair Jerome Powell, asked in a private meeting with US lawmakers how much further the central bank will raise interest rates this year, pointed to policymakers' latest forecasts showing they anticipate one more increase, according to Republican Representative Kevin Hern. Hern is the chairman of the Republican Study Committee, the group of conservatives with whom Powell met on Wednesday. Powell was essentially recapping what policymakers made clear last week when they released new interest-rate forecasts, known as the Fed's dot plot.

The Federal Deposit Insurance Corp., facing almost $23 billion in costs from recent bank failures, is considering steering a larger-than-usual portion of that burden to the nation's biggest banks, according to people with knowledge of the matter. The agency has said it plans to propose a so-called special assessment on the industry in May to shore up a $128 billion deposit insurance fund that's set to take hits after the recent collapses of Silicon Valley Bank and Signature Bank. The regulator — under political pressure to spare small banks — has noted it has latitude in how it sets those fees.

European stocks are poised to extend gains as worries over the banking sector continue to recede. The ECB presents its Economic Bulletin. Swiss National Bank governing board members Andrea Maechler and Thomas Moser speak, as does Riksbank deputy governor Aino Bunge. Data include European consumer confidence, Italy unemployment and CPI inflation for Germany and Spain. H&M and Poste Italiane deliver earnings results.

This is what's caught our eye over the past 24 hours.

A $3 trillion threat to global financial markets looms in Japan.
BMW, Mercedes boom in Singapore as rich shrug off higher taxes.
Turkey set to approve Finland's NATO membership on Thursday.
Barclays strategist sees ``second wave'' of bank deposit outflows.
Wild stock market reversals put dip-buyers on pace for historic year.
Ericsson CEO, directors lose liability vote over Iraq scandal.
$74,000 can get you the closest to being James Bond.

European markets have now seen three days of relative calm. Three days without a >1% drop in the Stoxx 600 and three days since bank shares posted losses. German bunds are again moving less than 10 basis points a day and oil price swings have settled to less than a single standard deviation. Some even argue that themes that held true in the innocent days of February might make a comeback.

But animal spirits, like a startled horse, remain skittish. Implied volatility -- effectively the cost of insuring against price swings -- for options on Europe's lenders remain elevated, near levels registered at the end of last year's drawdown. And the skew, or difference between the cost of puts and calls, is near the highest in a year. Gold prices are still teetering near $2,000 an ounce, about a fifth above their September lows.

Behavioral economists tell us this makes sense. Recency effects, where vividly remembered events in the immediate past are given greater weight in investor allocation, is widely studied and leads to both cognitive and emotional biases, according to the CFA Institute. Think of it like this: Someone who witnessed a car accident might become more likely to wear a safety belt, even though their own odds of being in an accident had not changed by the rational standards of an actuary.

And it's not all irrational either. The underlying math may well have changed. Sure, investors were aware that higher policy rates tightened financial conditions and raised the odds that leveraged businesses would fail. But banks, where the example of SVB stands out, shouldn't have been in this category. That's particularly true with the increase in regulation that followed 2008. The fallacy of that assumption has now been revealed. And adding new risks to the equation means new, more fragile assumptions may be the rational choice to make when allocating portfolio funds.

This commentary first ran on Markets Live on the Bloomberg Terminal, where Eddie van der Walt is Deputy Managing Editor based in London. Follow him on Twitter at @EdVanDerWalt.

(On Wednesday, we inadvertently referred to FTX as being listed in the US. Apologies for the mistake.)