tom: this is bloomberg daybreak: europe. i am tom mackenzie in berlin. we are here just two days before germany goes to the polls. we will speak to the d.l. ceo and cofounder on the state of the german tech ecosystem. at 6:40, our guest will join us with her views on the election's

most likely outcome. at 8:30, we are joined by the author of in search of berlin. at 9:30, a former german abbasid or to the u.s. shares his views ahead of what could be -- german ambassador to the u.s. shares his views ahead of what could be the most consequential election in decades. china's tech rally rules on. in japan, nissan spikes 11% on reports it may seek investment from tesla. the u.s. treasury secretary tells us sanctions relief for russia could be on the table. we bring you our conversation with scott bessent. will undecided voters in germany did the lead of frederick mertz? we will have analysis throughout the show.

let's check in on these markets. asia in focus with a tech rally continuing. the earnings coming through from that e-commerce giant with a focus on the platform but also cloud leading into ai, saying the key priority for alibaba is agi, artificial general intelligence that stock is booming in the session and lifting the broader sentiment across the regional index. , now up .6%, set for six straight weekly gains. currently that stock and index

up 4.8% and had crossed higher by 5%. the rally continues. european markets fell around .2% yesterday. there has been profit-taking across the u.s. space. we look for fresh catalysts. pmi data out of the euro zone will be coming through. european stoxx 50 futures pointing lower. ftse 100 futures pointing lower by six points. s&p futures after modest losses yesterday following around .4%, pointing lower by another .1%. nasdaq futures dropping run half percent yesterday. palantir was lower. walmart with a miss on earnings. jp morgan also struggling. let's look cross asset. we have been hearing from other fed officials and continuing the message around a cautious of roach to next -- cautious

approach to the next cut. the benchmark 10 year currently yielding 4.48%. euro-dollar at 1.04, down .1%. we will see if the pmi adjusts. 76 dollars a barrel on brent. oil is potentially set for its biggest weekly gain since january. gold trading close to the 3000 level but still potentially set for its eighth straight weekly advance. eight weeks after the german parliament was dissolved, germans about this weekend following an election campaign that has failed to turn around the fortunes of olaf scholz. all crook is outside the chancellery in berlin. set us up on what to expect as europe's biggest economy has to the polls in a vote that is arguably one of the most consequential in decades. oliver: yeah. consequential in decades.

it also has a lot of new features, namely that the afd, the far right party, has been one of the main protagonists. he mentioned an eight week election campaign. this began on november 5, which will be a fateful day for europe and germany, the day donald trump was elected president of the u.s. and olaf scholz's coalition collapsed, paving the way for this. if you think about the timeline, no member five -- november 5 until the vote today, this highlights part of the issue that germany has been grappling with over the last for years, which is not being able to get things done and get things done quickly. heading into the polls, we have looked at something that has not changed since november 5, where you have the cdu leading. you look at that historic average and that will be quite a bit lower than what we have seen in terms of a leading already in

germany since the turn-of-the-century. merkel was always doing about 30%. much better than olaf scholz, who had the lowest governing majority with about 25%. so what friedrich merz is hoping to do is consolidate some of that vote and power and be able to lead a strong coalition at a moment when not just germany but all of europe needs to move faster. tom: and the polling suggests there is little chance of an absolute majority, as you highlight. talk us through the potential coalition options that could come through in the weeks and months ahead. rachel: we should say coalitions -- oliver: we should say coalitions are a normal part of the german political process. there's only been one absolute majority since the end of world war ii, so generally you have parties working together on a number of issues. the cdu now is likely potentially, in terms of the

arithmetic, could go into a coalition with the spd. the spd is expected to get its lowest vote ever in the history of the party. that will likely pave the way for olaf scholz to step down, which will make it easier for these parties to work together, because there's been a very acrimonious political campaign coming into this election. there is the possibility that the greens could get enough to work with the cdu. i have spoken to senior cdu lawmakers who say that despite the fact that they probably have more in common with the spd, on an interpersonal level, they get along better with the green party. the worst case scenario, something we need to pay attention to sunday, is not the parties to get the most votes for the parties to get the least, because any party that gets below the 5% threshold of the total vote gets knocked out of the buddhist -- of the bundestag. that rewrites what's possible for coalitions.

you see some support for the cdu dwindle and support for smarty -- for smaller parties raised and you have a fractured system going into this weekend that would make these coalition talks more difficult at a time where we have had two years of consecutive contraction in germany where things need to get done. tom: so we look down the pecking order at smaller parties to see if they can get across the line. oliver crook outside the chancellery for us breaking down and setting us up with a preview of that vote. oliver crook will be part of that. a special program when polls closed sunday live from berlin. the group of seven is struggling to agree on a draft communiqué to mark three years since russia's invasion of ukraine. the financial times is reporting the u.s. is opposing calling

russia the aggressor, threatening to derail a traditional show of unity and also to derail the truth arguably. a national security advisor push back against claims that the u.s. has not consulted with allies in europe as it looks to bring an end to the war in ukraine. >> i want to push on this notion of our european allies not being consulted as we have entered into this process. i mentioned the immediate phone call trump made to zelenskyy. he has talked to president macron in france. prime minister starmer is coming thursday. tom: let's bring in bloomberg's russia economy and government editor, greg sullivan, with context. are the champagne corks popping on moscow at this point? greg: well, the mood in moscow

certainly is shocked right now. the kremlin was taken aback by both the speed and harshness of trump's comments. in many ways, this exceeds their expectations of what they hoped for in bringing the u.s. to their view on the war, but caution remains, even as they are happy about what they are seeing. they are very cautious. russian officials don't understand trump's negotiating strategy. they worry about potential traps down the road and also trump is a famously minor -- mercurial person and could change stands quickly so they are trying to analyze and understand how is this white house operating, what lies ahead and what is the negotiating strategy, even as they are happy with what they are seeing. tom: happy but was a sense of caution. meanwhile, we are getting more detail on how european leaders are looking to fill the gap when it comes to defense across europe and for ukraine.

what do we know about france's position and what that could mean for the rest of europe? greg: europe has struggled to come up with a response to the u.s. they have been shocked and unsettled by the speed and shifting they have seen. the u.k. and france are drafting plans for a reassurance force for ukraine and macron has said he wants to see europe shoulder more of its military burden, to be more autonomous over the next five to 10 years. that really is a response to the trump administration. the trump administration has said they want europe to shoulder more of the burden of their own security. as you know, both u.k. prime minister keir starmer and french president emmanuel macron are going to washington. they are trying to reach out to the trump administration and head off any kind of risks to the transatlantic coalition or cracks in that partnership that appear to be showing up early in the trumpet administration. tom: bloomberg person mark

sullivan. thank you. let's see how asian markets are faring. let's bring in avril hong in singapore. alibaba is back. avril: absolutely and it is delivering a boost, pulling off the rest of the markets. and that is a rally 05 plus percent you are seeing, doubling from the 2022 lows, the highest we have seen since early parts of that year and against this backdrop i thought i would highlight how we are seeing mainly in stocks looking pretty positive. and dollar yen also in focus. but back above that now amid comments from this meaning bond

purchases looking dovish. and take a closer look at the rally in alibaba after a blistering 2025 where we have seen about that and it's also pulling up the likes of tencent, jd.com, also highlighting nissan. this is the troubled japanese automaker. we saw how that plan with honda will probably be dropped. now we are hearing that the japanese group, which is getting support from a former premier, is drawing up plans for an investment that could potentially be led by the likes of tesla, so this is the stock reaction, surging well past 10% at one point earlier. tom: that is a remarkable turn of events.

potentially tesla's investment in this and we watched the details. that is far from confirmed. avril hong in singapore with a check on the asian markets, where it is very lively. u.s. stocks falling from an all-time high after the world's largest retailer issued a disappointing forecast, any concerns about the economy's s main engine. valerie tytel joining us. this is a finger on the pulse of the u.s. consumer. are we starting to see the consumer in the u.s. crack? valerie: you take these weak guidance from walmart in combination with some other readings on the u.s. consumer and it is not painting a very positive picture. retail sales last friday had the biggest drop in almost two years. we are also getting reports from the new york fed showing credit card delinquencies are continuing to rise, credit card balances are continuing to rise. it paints a negative picture of

the u.s. consumer looking forward and you add that in combination with fed speak of late. we heard from kugler saying they are in no rush to cut interest rates again so it seems like any reprieve at least from lowering interest rates for the u.s. consumer is not necessarily on the horizon. it seems like stubborn inflation and high borrowing costs are hitting their bottom pocket. tom: and inflation was brought up by scott bessent as one reason why he was reluctant at least here and now to put out issuance further along in terms of treasuries. what did you make of the comments from the treasury secretary on how they would be thinking about bond issuance? valerie: it was the first question to scott bessent out of the gate on how he intends to shape treasury issuance in the future. he called himself the largest seller of treasuries which i thought was funny. he talked about his intentions on the debt. take a listen to his response. >> that's a long way off and we

are going to see what the market once. the fed say they may stop there balanced she runoff. easier for me to extend duration when i am not competing with another big seller. it will be path dependent. valerie: so terming out the debt is a long way off and he also had interesting things to say when it comes to his intentions to revalue gold reserves. he says that is not what he had in mind when he wanted to monetize the asset side of the u.s. balance sheet for the american people but questions remain on what exactly he did mean on that statement. he also did not give us any hints on any out-of-the-box ideas floated to weaken the u.s. dollar. there's been some chatter recently about the u.s. potentially forcing its foreign creditors to swap treasuries for 100 year bonds, so no further color on any out-of-the-box ideas given in that interview. tom: the mar-a-lago packed. we have watched that with detail.

valerie tytel, thank you very much indeed with an update on the treasury secretary and earnings out of walmart with a bit of a warning on the u.s. consumer. coming up, what part will tech and tech startups play in getting this german economy growing again? we will speak to the ceo and founder of ai translation platform deepl, one of germany's most highly valued startups. this is bloomberg. ♪

tom: welcome back. happy friday. as the german election comes into view, the next government will inherit a contracting economy, but what part will tech and tech startups play in getting growth underway again?

my next guest is the ceo and founder of deepl, an ai translation platform. jarek kutylowski, welcome to the show. we start with the proposition that the german economy is in contraction and has been for the last two years. there will be those in the u.s. who say there is no tech innovation in germany. that is not true. there are startups and you are an example of that. what are the key challenges for your tech sector in germany right now? jarek: i think the most important thing about tech in germany and in europe in particular is there is not enough visibility. and we have seen some of the european countries, france in particular, driving a strong agenda around that, looking into the german elections now and seeing what will be happening over the next year in germany, i would like germany to step up on that too. and tech needs a strong backing from governments. there is legislative work to be

done but i think from my perspective the most important part is to drive this cultural change and understanding of how future economies are going to be driven by tech and how we have to embrace that. tom: if you were to have the ear of the next chancellor, what key priorities would you push for? jarek: i would really want the next chancellor to be on the stage with the tech and drive this cultural change, drive the pr for tech, drive the understanding of the whole country for that. there is a legislative change to be done. we still need better tech regulations for making sure we incentivize young interpreters to invest their lives and do the risk that is necessary to build large tech companies and i think we should rethink our stance on regulation and how strong we think regulation should be in germany and in europe in general.

tom: on regulation then, do you have a sense, from the leading members of the party, whether it is the cdu, the spd or the greens, that they are willing to move to an innovation first approach that you say they should prioritize? jarek: i have not seen strong enough signals, i would say, across any of the parties until now to be really as forward thinking when it comes to how regulation impacts tech and how important it is for the overall tech scene, so i would like to see more from everyone. tom: there's an argument you could take the industrial base of germany and create efficiencies and product video by layering that shan productivity by layering -- and productivity by layering things on top. how willing are they to adopt these innovative solutions and push through some of this digitization and innovation? jarek: some of the problems for

them in terms of adopting new tech are really in the regulations and how strict those might be and how deliberate they need to be in driving that change, so i think that point is going to help them quite a lot. i think in the current set up, everyone understands we need to work more efficiently, and tech for itself can drive a lot of value for the economy, but combining the other industries with tech and domestic tech, even, to also get a better understanding of what this is about will make a big difference if we can pull this off. tom: you and the team at deepl, it's a global business, clearly, but as you look to your future, does your future remain in germany, do you think? jarek: i think we are really a global company, so there's a lot of markets that we are operating in. our strongest market is germany and i think it will remain for some time.

from that perspective, we are keeping for a solid german and european foundation. tom: ok. jarek kutylowski, deepl ceo and founder, on what the next german government needs to do to use that innovation to lift this economy out of contraction. at 930 game u.k. time, we will speak with a -- 9:30 a.m. u.k. time, we will speak with a former german ambassador, current president of the munich security conference foundation alibaba -- foundation. someone from alibaba next. this is bloomberg. ♪

tom: welcome back. happy friday. let's check in on the asian markets because the tech stocks are flying and that is thanks to alibaba, which came through from strong results indeed. you saw alibaba posting its fastest revenue growth in over a year. the stock is up 65% year to date. you can see the rally in the session. because the waiting across these indices, it is lifting the mood across the region. the msci regional index is currently up .6%. the games currently coming through for hs tech, currently up more than 5%. alibaba soaring. csi 300 currently up 1.3%. the ceo of alibaba saying their key priority now is moving and building towards artificial general intelligence. that is putting them squarely

had to head versus the likes of openai, anthropic and deep mind, and investors are rewarding that tilt. standard chartered announces a $1.5 billion buyback after reporting earnings that beat estimates. from tech to the bankin stocks , we will speak to the ceo, diego. that is coming out. this is bloomberg. ♪ the way i approach work post fatherhood, has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

tom: good morning. this is bloomberg daybreak: europe. i am tom mackenzie in berlin. these are the stories that site your agenda. china's tech rally rules on.

alibaba posting the fastest revenue growth in more than a year. in japan, nissan spikes 10% on reports it may seek investment from tesla. the u.s. treasury secretary tells us sanctions relief or russia could be on the table. we bring you our conversation with scott bessent. plus, will undecided voters in germany didn't the lead of can's -- germany dent the lead of conservative leader friedrich merz? let's get to the markets. in focus for us now is alibaba, the stock surging double digits on the back of a beat in terms of the e-commerce cloud story and the ceo saying ai is now the priority for the business. alibaba and jack ma are friendly back in the front seat. you see the gains coming through. it is up about 5% year to date. european futures searching for direction. a similar story for u.s. markets. you saw some losses in the u.s..

the s&p and the nasdaq down between .4% and .5%. walmart taking a hit lower on a slightly softer outlook for consumer demand for that retailer. jp morgan saw some heavy losses in selling yesterday. european futures flat. ftse 100 futures pointing lower. s&p futures lower by .1% as well. nasdaq 100 futures also flat. these equity markets in europe and the u.s. are struggling for the next step and a direction seems to be lacking. let's have a look cross asset. fed speakers reiterating their cautious approach to future rate cuts. the 10 year is back below 4.5%. yields are down. the euro-dollar close to 1.05. brent set for another strong week of gains if you look through previous days.

gold closing and still onto that 3000 level, taking profit. the run-up in gold has been pronounced. standard chartered is set to return another $1.5 billion to shareholders as the lender reports fourth-quarter earnings that beat estimates. let's crossover to london, where anna edwards is standing by, ready to speak to the cfo. >> thank you very much. i am joined by diego, the cfo of standard chartered who joins us in london. nice to have you with us. so the numbers themselves coming in better than estimates, returning $1.5 billion to shareholders. you have given some guidance this morning. i wonder whether it looks a bit conservative. that is one of the conclusions coming out of one of the analysts. how rationalize the guidance? diego: we upgraded our guidance in q3 and delivered another strong repeat performance by our

engines of growth, financial markets, banking and our wealth management business. it has been consistent delivery quarter after quarter. that has allowed us to reach 11.7% return on tangible equity, which is a 160 basis point increase. we are delivering topline growth of 14% and marrying with a returning capital to our shareholders and have announced, as tom said, another $1.5 billion buyback, which, when you think about it, means we are delivering what we promised to our shareholders, which is sustainably higher returns from a high-growth business in our market. anna: and a lot of banks have experience in being assisted in this activity from high interest rates. what are you assuming from this year and therefore could you be -- could your numbers do better if rates are not cut as much as maybe we were expecting recently? diego: the environment might be

more conducive than we were expecting up until a few months ago, but first of all, let's remember that in terms of contributions to topline, our net interest income contributes about 50% and our non-net interest income contributes another 50%. non-net interest income has very strong changes in growth as we have discussed. in terms of net interest income, we have been building up our hedges, de-risking the delivery, and i think that positions us well for this slightly more in certain will -- slightly more uncertain world. anna: one of the areas i wanted to ask you about his global markets and what you managed to achieve there, getting a boost from some of the volatility in markets. that has been a story across wall street and lots of the banking sector. is that sustainable in any way? do you have visibility on whether that kind of performance is sustainable? diego: i think it is sustainable for us and the reason is our

markets business is a peculiar type of market business. because we are a giant connector bank, 75% of what we do in markets is helping our clients manage their exposures to foreign currency, interest rates and other risks. that is recurrent activity. when volatility spikes, we add performance and helping them take advantage of those market dislocations, but the delivery of our markets numbers is highly de-risked by this attractive complexion in the business. the business grows well. we pointed out at q3 at our last set of results that this part of the business grows at almost 10% per annum and has been doing so for almost five years. anna: so you are confident in the sustainability of the performance there. in terms of the wealth management side of the business, managing money for increasingly wealthy people, what do those conversations look like at the moment? our global investors talking about, well, there is still no

alternative to being invested in the u.s. and that tech story? how is it shifting? diego: for us, it is a global narrative, in particular because of the nature of the wealth management activities we do. we are present across the continuum of wealth management, all the way up to the private bank. the core of what we do is with affluent customers, customers that have $500,000, $1 million, $2 million. these people save and invest with us. this kind of debate is focused really on the longer-term. from that point of view, we are assisted by the secular trends that we have in our markets. our markets are the fastest growing in the world. the places where most of the wealth of the middle class over the course of the next five years is going to be created, asia, the middle east and africa. anna: let me ask you about the share price performance because

bill winters described the performance of the shares as crap recently and i wonder if you have a different word you would like to use because it has caught up with the rest of the european banking sector. diego: three words -- more to do. i think we have done well. by the way, we do not manage to the stock price. we manage the bank, tried to deliver higher returns, deliver excess capital after we have invested heavily in our business, but is true we have had a good performance, but we keep our eye on the ball and continue executing and hope the market will continue to reward us, but there is more to do no doubt. anna: we take that message. in terms of the way you reward staff, we are in the u.k., and here, you have more flexibility to pay staff with bigger bonuses since some recent regulatory changes. how important is that in the global competition for banking talent? diego: very much so in the sense that it is truly a global competition.

we have always been aligned with the industry and tend to be with it going forward and the shift towards more performance related pay is ideal. it aligns the interests of our colleagues with the interest of our shareholders and enables us to attract talented people, which is what we need in order to serve our clients in these uncertain and more fragmented time. anna: more uncertain and fragmented and you mentioned how that helps on the global markets business. and there is a lot of need to perhaps hold investors hands through a lot of this volatility. i wonder how this drives volatility when you are managing money for wealthy investors. does that mean they require more different things from you? diego: very much so. allow me to take a step back. there is discussion about deglobalization, lack of growth,. the world is growing strongly and we continue to do so. deglobalization is just

globalization shifting towards new corridors. these new corridors of growth globalization are shifting towards our the intra-asian, asian to the middle east, asia to the middle east and africa corridors that standard chartered really sits astride. anna: but there's less overlap between them in a deep globalized world. diego: maybe, but the diversification effective that will lead to a continued set of flows that will be more fragmented, and that fragmentation, the complexity of navigating this environment, is what our clients look to us for help. anna: diego, thank you. de giorgi, ceo of standard chartered. tom: thank you very much indeed. interesting conversation. anna edwards alongside the cfo standard chartered. to the u.s., where the treasury secretary has said sanctions relief or russia could be on the table in talks over the ukraine more. bessent told us president trump is committed to ending the

conflict very quickly. >> i think president zelenskyy unfortunately escalated and has put some daylight -- >> how did he escalate? sec. bessent: a lot of his remarks in munich i felt were inappropriate. president zelenskyy, when i met with him, assured me he would be at the signing of the deal in munich. he was not. and the real purpose here, and i think it has turned into kind of this media circus, that president trump had a very elegant plan and it was bring the ukrainians closer to the u.s. let's do this economic deal and even karl rove in the wall street journal this morning approves of it that the u.s., with greater economic interest in ukraine, provides a security shield, so the sequencing of

what was going to happen was bring the ukrainians closer to the u.s. through economic ties, convince the american people and the american public, get them on side, and then tell the russians, go to the negotiating table with a very fulsome message that, if we need to, we will take sanctions up. >> what about capping the russian frozen assets? some $300 billion. would you force your european counterparts to none actually have them frozen that to not -- counterparts to not just have them frozen but actually cap them? sec. bessent: they are being capped. >> interest. sec. bessent: the returns from the frezed asset pile will pay the europeans. what is important to understand is that everything the u.s. has done to date that the american people, the american taxpayer --

europeans, roughly what half of they have done, our loans, and the runoff from the frozen assets is being used to repay european loans. tom: have you communicated that? sec. bessent: what's that? >> have you communicated to the europeans that you are upset with them? sec. bessent: i think vice president pence did a good job. >> do you think they understand that the u.s. is running a deficit close to 7%? do they think -- do you think they understand the gravity of the moment in the u.s. from the u.s. perspective? sec. bessent: i think they understand that president trump, during his first term, this term, vice president vance, and the entire security apparatus have told them that many of the countries are deficient in their nato spending and they need to come up with it. tom: u.s. treasury secretary

scott bessent speaking with our colleagues on bloomberg surveillance. israel says a body returned as part of a cease-fire agreement with hamas was not that of a mother taken hostage with her two sons in october of 2023. the exchange happen as negotiations for the second stage of a cease-fire are do to start. our middle east team leader for the region, paul wallace, joins us now. what are the details of this exchange? >> hello, tom. as you mentioned, one of the four bodies handed over by hamas yesterday as part of the first phase of the cease-fire and hostages and prisoners exchange was not who hamas said it would be. it was meant to be a 33-year-old mother and, after israel did forensic tests to identify the body, it found out that this one was not her. two children who israel -- who

israel says were murdered were identified and it was them, as was a man in his 80's, but she was not, so there's obviously some confusion now. israel does not know who this person is. the body doesn't match the records of any of the hostages taken on october 7 2023. it is fueling a lot of anger once more within the israel about what hamas is doing and the way it is conducting this hostage exchange. the next thing is saturday, when six living hostages are meant to be released and more prisoners will be free from israeli jails, so the cease-fire is continuing, but it is certainly shaky and there is no guarantee it is extended beyond the deadline of early march. tom: so we will look to saturday

to see if that release happens as part of the cease-fire. paul wallace in dubai with the latest out of the middle east. thank you. coming out, we delve into what is at stake as europe's largest economy has to the polls. our guest joins us next for her take. stay with us. this is bloomberg. ♪

tom: welcome back. on sunday, germans will be voting on what could be one of the country's most consequential elections in decades. to help us delve into what is in stake -- what is at stake, i am pleased to be joined by sudha david-wilp, senior fellow at the german marshall fund. thank you for joining us. talk to us about the potential outcomes post sunday.

we know it will be weeks, potentially months, to form a coalition. what is your best gauge right now of the most likely outcomes after the hugely consequential vote? sudha: good morning, tom. it is still very hard to say what the outcome will be after sunday's vote. one thing we can say is that the head of the conservative party, the cdu, is poised to be the chancellor. the question is will he only require one party to work with or will it be a three party coalition, which proved to be unwieldy the last time around, as we all know? the traffic light coalition collapsed last november because of massive inviting. if the small parties make it in, it will be hard to form a two-party coalition. if the smaller parties, the fdp and two smaller on the left of the political spectrum, make it in, merz will be looking to meld

them together to make a governing majority. tom: the list for the next government is long and significant. what for you should be the priorities of the next government, the first priorities in the first 100 days? sudha: most voters are concerned about migration. as you know, there have been a spate of attacks on german citizens on the part of migrants over the past couple of months, and of course there's worries and anxiety about the state of the german economy. now, these two issues are actually linked to geopolitical changes that germany is facing, and i think the next government has to be equipped to make bold reform so that germany can sort of position itself alongside europe as a capable global actor, and those issues are going to be defense spending, spending on innovation, and spending on infrastructure as well as maintaining germany's social market economy, but that

means there's going to be a serious question about reform of the debt rate or setting up some sort of special fund again. tom: no doubt you have your finger firmly on the pulse of the body politic of germany and speak to lawmakers i am sure. if we do get that grant coalition, if the political arithmetic lines up for the cdu and spd to partner, what is your expectation that lawmakers are ready to push through those reforms, whether that is adjusting the debt break or spending more on defense? are they ready and willing to do this if the arithmetic is there? sudha: this time, a grant coalition definitely faces so much pressure on the outside and well at -- outside as well as within. the last time germany had a grant coalition was under chancellor merkel and she governed from a comfortable position in the middle. she had three grand coalitions during her four times in office. this time around, i think german policymakers know there is no

time to just cater to the base and it is not business as usual. if they don't make reforms, it will seriously jeopardize germany's position and europe's position in the world as well as give the afd perhaps even a better, the far right party, a better outcome the next time around germany faces a federal election. tom: is the afd better positioned right now? is the afd charting the course of the national rally in france? sudha: interestingly enough, the afd has also been quite stable in the polls. is capitalized on fears about migration and economic anxiety as well as with russia's full-scale invasion of ukraine, but sort of the endorsement of elon musk and trump and his circle of supporters specifically vice president vance's speech at the munich security conference last weekend was clear about from's position on support of the afd -- about

trump's position on support of the afd but has not necessarily moved the needle. most voters are with the afd because of its messaging on migration and economic paralysis in germany. tom: ok. sudha david-wilp with the analysis ahead of these consequential elections in germany, senior fellow at the german marshall fund. we appreciate your time this morning. thank you. there's play more coming up. we will give you a breakdown of the pmi data expected of europe later and a touch on alibaba. shares soaring in the double digits. stay with us. this is bloomberg. ♪

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tom: welcome back. we get some data that tells us more about the health of the eurozone and germany as we had to the elections sunday.

there's a sign the pmi's, manufacturing and services qamar starting to turn around. the manufacturing pmi even in germany is starting to pick up, yes, below the 50 line, that reminds a citizen contraction. so far only the u.s. it is in that in beal position of expansion, but even the u.k. and germany are starting to pick up. we will see if the data that crosses will confirm that trend. green shoots maim -- maybe for the german economy. let's have a look at what the stock performances are suggesting. if you get at least a market positive outcome when it comes to the election in germany sunday, a grand coalition, then look to the mid-cap stocks listed in germany. they have underperformed by about 20% since 2021 versus the dax. exposed to the german economy by 40% in terms of revenues versus 20% for the dac. if you get a market positive outcome, the grand coalition, look for that to play catch-up. let's check in on alibaba.

that surging on strong results and leaning in to ai. that theme continues, up double digits in the session. alibaba is up about 65%, leading and lifting the broader asian markets. we will bring in the news, analysis and market moves as we continue the build up the german elections, including a special program when polls closed sunday live at the capital. the opening trade is up next. stay with us. this is bloomberg. ♪

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>> good>> morning from london. we are in our away from the opening trade. standard chartered plans to hand back 1.5 billion dollars to shareholders after the lenders trading wealth businesses helped propel it to win earnings b. the bank of japan's governor signals he may intervene in the bond market as accelerating inflation raises rate hike expectations.