>> this is bloomberg daybreak: europe. after one of the most consequential elections in germany's history, we have a great lineup of guests to help

us unpack the results. will speak to the strategy had at cibc joining us for his take on the markets. the chief european economist at goldman sachs will be with us at 7:30 later, we will hear from the iso president. and the biw president. but first, here are the stories that set your agenda. germany's conservatives win the federal election. chancellor olaf scholz paul -- party suffering its biggest defeat since the second world war. merz says he will get the economy back on track. >> the world will not wait for us and it will not wait for a lengthy coalition talk and negotiations either. tom:'s china salvo.

the u.s. president targets beijing's spending on tech, energy and strategic sectors within a month cutting china's trade surplus. as the war in you and enters its third year, donald trump's top advisers decline to describe russia as the aggressor. zelenskyy said he would step down as president if it guarantees peace and nato membership. germany's conservative opposition leader merz says he will move quickly to form a new government after his center-right alliance won the election. this result will require him to

forge a coalition. the tally showing the cdu csu block ahead of the far-right alternative for germany and chancellor olaf scholz's social democrats. merz's alliance won 28.6% of the votes. the sdp finished third with 16 .4%. merz ruled out an alliance with afd but could form a coalition with the spd and would not need the greens to make up the numbers in the bundestag. here is what the leaders of each party had to say following the results. >> we ran a very tough campaign. nonetheless, this campaign was necessary. in the debate about the important and major issues of our country, economic policy, migration, for nancy ready policy, and internal security.

now we will talk to each other in the most important thing is to reestablish a viable government in germany as quickly as possible. >> we have doubled our votes. they wanted to cut us in half. the opposite happened. i must say one thing. our hand will always remain outstretched for participated -- participation in government to implement the will of germany. we are with -- ready to participate in government. >> it is a better result for the spd and an electoral defeat. given the election results come of this needs to be said clearly and explicitly at the outset. tom: let's check it the market reaction to a rewriting of the political landscape in germany. the euro is up, european is gaining. the euro gaining 0.5% at 1.05

for the single currency, a coalition that is likely and the top line is that it is market friendly. questions about the debt, it doesn't seem to have the two-thirds majority for making the change. dax futures, looking to gain 1.1%, german equities, of dax record highs looking to build on that. bonds lower, and that could mean high yields when it comes to german debt. goals gaining marginally that 2937, grinding towards 3000 per troy ounce. let's take a look at the other movers when it comes to asset classes this monday morning on the back of these results. let's see have u.s. futures are pointing, currently pointing to gains of 0.5 percent after dropping 1.7% by the close of

play on friday. the data much softer than expected on the earnings front. nvidia numbers dropping on wednesday, could be a catalyst for the markets. merz says he will form a new government within two months. with the cdu winning less than 29% of votes, he will need to assemble the coalition. here to discuss the options for merz is our executive editor for europe who hasn't had much sleep. what are the options right now facing the likely incoming chancellor? >> merz's active power got clear overnight. smaller parties could have gotten in but they did not. if he wants to form a coalition quickly, is most likely partner is the social democrats. those parties based on the final results we have, they would have enough for a majority in the bundestag.

all other paths to power get messy. he said he won't go into a coalition with afd. there aren't many other options. for the social democrats, all of a sudden they have a lot of leverage in the negotiations because they know merz needs them to form a coalition. they had the worst result for the last 12 plus hours, the worst since world war ii and yet they are in a position to demand quite a bit going to the coalition because they are all he has. tom: where does it lead the afd? this is the best electoral hauled this far right have had since their foundation. more than 20% of the vote. where does that leave the afd? >> in terms of their ability to affect policy they didn't get to a minority. they would've had to have over 30% to do that. but they have been affecting

policy given how the vote shifted to the right. i was looking, what were the top concerns for voters? the main thing was safety and immigration and the second was the economy. these are the things they afd has been talking about and the parties, many of the parties have moved to the right so although they won't be able to push through policy, they are affecting the decision-making of the rest of the parties in power. tom: and gearing up to see if they can win the chancellorship at the next election. when it comes to the death break , how should the markets interpret how close we are to reform of the death break this morning? >> at this point, the afd doesn't have a block minority on its own. they afd and the far left party together have the block minority so the parties in the center basically to change the constitution you need a

two-thirds majority. parties in the center don't have that in the new bundestag. tom:. >> that includes the grains. >>. >> they don't get to the two third of victims on their own change the constitution which out -- without one of the other two parties joining them. what they can do is suspend it for a year and say we have an emergency, we need to help ukraine. i think that will be likely. they will set up a special defense fund. we saw that when the war started. while they will be unlikely to reform the debt break, they will likely be able to suspend it and i think it is likely will see them do that. tom: chad, thank you very much indeed on where things stand. the market implications of the german story, traders hope germany's election outcome will

see a pivot towards increase spending on reforms although there are caveats. two straight years of construction -- contraction. valerie, there has been a market reaction. dax viewers -- futures higher, euro gaining. >> market friendly outcome of the german elections, clear winner, two party coalition likely to be formed in the two smaller parties just came shy of the 5% level to get representation in the bundestag. that is pointing to risk on when it comes to german equities, dax futures up 1.2%. shrugging off concerns about the debt break because the mainstream parties have fallen short of the two-thirds majority needed to reformat but positivity in the equity market and affects, let's check out the euro-dollar is trading, crossed the 105 handle just overnight, trading strongly come up 0.5%. let's check on the 100 day

moving average. on the verge of a breakout for a stronger euro, tested the 100 day moving average once before a few weeks ago and failed. testing it again, the 100 day moving average 100 i .40, iq level to watch. tom: watching that. the market reaction, thank you. olaf scholz the outgoing chancellor, social democrats his party had their worst result since world war ii. he signaled they will not take part in coalition talks with the conservatives. let's bring in kriti gupta, on the ground with the spd as result trickled through. talk us through what this means for the social democrats and olaf scholz. >> display was the initial reaction when the 16% number came in because there were so many people in the spd headquarters expecting at least 20% or higher.

the worst result since world war ii so not only dismayed but ultimately, silence and that is the mood of the spd. only for the mood to turn around by the end of the night as we got the results from the other parties that came in below 5%. the ftp was one of them, given the spd had a falling out with the -- the ftp. the 5%, cheers in the room which is -- which encapsulates the mood. they are realizing there is an element of control and negotiating power. the question is where does the coalition talks begin? that is where the spd is throwing their hands up and saying it is merz's. tom:tom: turn the alphabet soup is there with the ftp. talk to us, what is next? we have been talking to members of the party, the stp who had been the leaders within that. what is the next were social

democrats given the shellacking they faced? >> now it is coming to who is the party leadership. that was clear yesterday, olaf scholz taking full responsibility for the results and saying he gave it his best. the party leaders saying the same thing, he has given it his best shot, he fought like a lion to the death. a lot of that imagery being used but now you see party leadership change and that is something talked about at the headquarters. the idea of perhaps boris pistorius, currently the minister of defense, taking a bigger role when it comes to leadership of the party not only for the party but perhaps a cabinet position if indeed that is where merz decides. this comes at a time when you have a lot of conversation about how germany fits into the defense structure and that has changed in the last two weeks given whether or not germany wants a seat in the table when it comes to ukraine negotiations, the nato presence. the u.s. is a big military

presence in germany and does this mean they have a bigger kind of seat at the table when it comes to the entire european union? that is the question when it comes to pistorius but he is not the only one we want to talk about. another is the acting finance minister. take a listen to what he had to say about the future. >> at this point we are in the world of speculation when it comes to possible and potential coalitions. as long as it is completely impossible to predict who will have coalition talks, the future of the minister of an outgoing government is also impossible to predict. >> the current finance minister, one of the key folks trying to get loosening around the debt break. it is crucial whether we get that even though merz talks about two months of a timeline of forming the government, lots of people are raising eyebrows whether he will be part of the equation. tom: thank you, prospects for the socialists going forward who could of course be key partners

within the grand coalition. thank you. anchor of the opening trade. we have a great lineup of guest to continue to unpack the election results. the impacts, six: 10 we will bring in jeremy, g10 fx strategist at cibc. for a tick on the markets. then the chief economist of goldman sachs, later in the morning will hear from the president of an institute and the di w president as well. we will be speaking exclusively to the ceo of process -- of a company. that is 6:40 a.m. u.k. time. don't miss that conversation. this on news around a deal involving just eat. we will bring you details on that in the next few minutes.

the interview, coming up at 6:40 a.m.. plenty more coming up. this is bloomberg. ♪

>> we have a clear mandate. olaf scholz is down and that is the good news of tonight. we will change course of germany. we will bring back growth, and illegal migration and meet our sick needs especially regarding that. that is a clear mandate. tom: a mandate for a change of policy. speaking to bloomberg's all over crook, the cdu's headquarters

yesterday following the election results. germany's high-stakes election, paving the way for a pivot to increase spending potentially with markets predicting the end of a narrow for constrained fiscal policy. the focus turns to the formation of a coalition government which could take weeks, potentially months. let's bring in jeremy. is this a market friendly result? to what extent can the gains in the euro today be sustained? >> good morning. it is essentially a market friendly result. we saw that in terms of the euro gains after the exit polls yesterday, the market hoping we would get the coalition or most likely grand coalition between the cd you the spd and that is what we are going to get. it was the risk variable that would be the support of some of the smaller parties.

if one got over the 5% threshold the euro might benefit but the issue of the debt break will probably be the caveat will probably preclude the euro from trading aggressively higher. i think the 100 day moving average could be a barrier as investors are slightly nervous to see how the new administration will deal with the fiscal backdrop that it is a reasonably market friendly outcome and that has been reflected in the reaction. tom: important you bring in the question about the debt break given the two-thirds majority needed to make a significant reform around that. what will the markets be watching and monitoring in the days and weeks ahead? is it how the coalition comes together? is it commentary? what will the most sensitive? what will markets be sensitive to the days and weeks ahead? >> one thing that was going to cause consternation would be a

result that was relatively unclear. and the negotiations would prove long-lasting. if we do see a two party coalition, which should be the case, the negotiations should be , should not last beyond the easter period merz merz which has been talking about. the spd maybe needs to look at its own internal structures and leadership but we will look to see how quickly a coalition can be formed. that could be put in place quickly, then we wouldn't have a protracted political vacuum in germany and that is necessary because i think the eurozone needs strong political leadership at the core, particularly as we focus on some of those external risks in relation to tariff dynamics. tom: i want your views on that. we get past april and don't have a coalition, that is when the markets throw a tantrum? >> i think so. if we get past the end of april

and we are still in negotiations, and there is no obvious sign of process or government put together, i think markets will be increasingly fractious and uncertain when it comes to the outcome of the election. remember we are talking about a government the two parties. but the largest opposition party, that creates uncertainty but it will be the coalition negotiations and whether the can be -- there can be progress. that will govern the market reaction. tom: you have a view on whether the result makes germany and europe more or less vulnerable to tariff threats from the trump administration? >> if you look back at the comments from jd vance at the munich security conference, he was being critical of germany in that context. in a sense, the result might raise the ire to some of those within the washington administration. does it change dynamics in terms

of tariffs? probably not. the euro zone is vulnerable when it comes to the tariff threat because the u.s. are particularly critical of the treated -- trade imbalance so there is a threat that remains real. i don't think the election itself changes the reaction from the u.s., but it underlines that there will be pressure from the trump administration in terms of that political dynamic which mr. vance was explaining at the munich speech. tom: rick if they suspend the debt break but don't perform it, -- reformist, what is that? >> not a positive outcome because the market hopes that would be permanent suspension and amendments of the debt break . a temporary suspension would be encouraging but it would limit the degree of upside so i think it is the case that those hoping

for 106, 100 6.5 would probably be disappointed when it comes to a one-year suspension of the debt break because of the lack of parliamentary support. you probably acts as a bit of a limitation in terms of the scale of the euro recovery narrative. the market was hoping for a fiscal boost but the fiscal boost will be contained or curtailed if we talk about a suspension and not a wholesale repudiation of the german debt break. tom: jeremy, excellent with the reaction. g10 affect strategy had. euro-dollar up 0.5%. the trump administration is taking aim at china with a volley of measures the risk worsening relations between the rivals. we discussed that next. this is bird. ♪ -- this is bloomberg. ♪

tom: welcome back. u.s. futures pointing higher but in asia, stocks taking a knock. let's bring in avril hong with a check on the markets. what is lacking across the asian space? avril: it is the drive we are seeing from chinese tech names but asia stocks were already in a bad mood will stop no thanks to wall street performance from last week and how we saw its worst showing among u.s. stocks so far this year amid lackluster u.s. economic data. you see that reflected in the korean kospi, the taiwan benchmark, japan on holiday but it is about chinese tech today and part of this is no thanks to what we are hearing from trump, his most sweeping action on the asian giant in his second term.

the measures could mean we see u.s. investment on chinese tech being cut and vice versa. if we take a look at how the hang seng is faring today, how this is the drag on the indices but what is interesting, as we hear how the likes of jp morgan are saying the stock rally in china could face the risk of a reversal given the resurgence in u.s.-china tensions and digesting how alibaba is it investment plans for the next couple years is massive. property stocks are doing well, bit of a rotation going on. tom: avril hong with a check on the asian markets. the asian markets. plenty mo and i had 20 grand of,

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stories that set your agenda. olaf scholz party suffers the worst defeat since world war ii, frederick will form a coalition to get the economy on track. frederick: the world will not wait for us. tom: trump targets beijing spending on tech, cutting the chinese surplus and trump's advisors decline to call russia be aggressor and zelenskyy says

he would step down as president to guarantee peace. election results firmly in focus, euro is higher on the expectation of a grand coalition , potential wrinkles on how the talks go ahead and questions about whether it will come to parse that they will get the spending essential to revive germany. dax futures are solid, looking to build on the gain, german bund futures expect more spending. gold is up 1/10 of 1% on the

yellow metal. leader frederick will be the next chancellor of germany but what does it mean for the wider continent? here is pretty goober here to talk about the chancellor. kriti: germany lagged when it came to covid but germany benefit from a cyclical turn in the economy so that's the first thing on his agenda which will be reflected in jobs with

layoffs across the country, incorporates treading water and number two is investment, frederick maersk will have the debt break feed into the conversation as we have donald trump tougher than his predecessor and party leaders spoke to each other, frederick said he wants to grow germany to be independent from the u.s. and this is crucial because he will be dealing with immigration. tom: trying to remove dependency . i was at the green party of the those is a trump administration

that has meddled in german politics. talk to us about the rewriting of the landscape. kriti: clearest readthrough was elon musk speaking about the afd immigration stance and jd vance made comments that shock to europe. the policy stance from the u.s. was a 180 but the most shocking point was the u.s. major military presence, trump talked about removing it in the u.s. pushed back, frederick maersk has been talking but ali crook,

take a listen to what he had to say. >> we have a clear mandate, olaf scholz is done. we got to change course of germany. we will meet our security needs and there will be a change of policy. kriti: he's talking about changing nato goals. it's not just national security, it is military infrastructure and energy and if you talk so much of that is based on lng.

from the u.s. and this is a sticking point that they're trying to clear up. tom: the defense minister currently there is speculation he could take over, we will see if that comes to parse. some arguments would depend on reforming the debt break, what should markets be thinking about regarding the debt break. kriti: are seeing optimism removed from the markets, spd and the cdu do not have the

numbers they need. they fall short so they have to get other parties on board. the greens for example. they can talk and say here is the acceleration of the military. tom: kriti gupta, thank you indeed. many guests will fall into kr iti's show.

later, we hear from ifo president and diw president. now today marks -- we have been talking about defense and marking three years since russia's invasion of ukraine. russia was the aggressor. are we seeing some movement to bring an end to the conflict? zelenskyy said he would step down if it guarantee peace and nato membership for ukraine. >> to achieve peace i am ready to leave, i will trade my post for nato membership, i'm focused

on ukraine today, not 20 years. tom: let's bring in piotr. how important is it that the european union the united? piotr: very important. the rhetoric from the u.s. is worrying for europeans. we are going to have a foreign minister meeting to discuss ukraine and emmanuel macron is

heading to d.c., the prime minister will meet trump in the idea is reassurance for ukraine, part of a settlement, but we will still need the u.s. umbrella for assurances to be credible, filling out a gap that the u.s. will leave behind, they were a major supporter. tom: zelenskyy offered to stand down, to stand down in exchange for peace. is this what trump wants?

piotr: trump said we had a bitter exchange where trump called him a dictator and wrongly said he had 4% support, so zelenskyy is saying if you want me out i agreed to step down. the idea for elections is unlikely, it is more rhetoric than reality, zelenskyy enjoys a lot of support, bigger than trump in the u.s. so he is still the leader. the nation is rallying around

him so that is where we are. tom: ok. as we marked three years since russia's invasion of ukraine. now some other stories making the news, u.s. government agency is advised employees to ignore a demand from elon musk to justify their jobs or face dismissal. trump said emails to more than 2 million workers ordering them to report accomplishments before midnight on monday. berkshire hathaway's earnings surged 71% driven by

underwriting and the 10th quarter in a row at a record at the end of 2024. pope francis continues to battle pneumonia. the pontiff is receiving oxygen to help with his breathing. tests show renal failure and the pope is alert and well oriented. researchers at wuhan say they discovered a new coronavirus in bats.

coming up, 4.1 billion euros. we digest the deal with the ceo. this is bloomberg.

tom: just eat take away was bought in the biggest deal to date. anner edwards is standing by with the ceo. anna: thank you for joining us so early, let me ask what

drawers you to just eat take away? fanrisio: europe needs investment, growth, innovation. just eat is a leader with many months of doing quiet well. we can invest here in euro so we are quiet said. tom: ok. we are digesting news flow on

how europe drives forward, is this a sign of corporate confidence? fabrizio: biggest food delivery, we don't have many big delivery companies and we need corporations to invest not only money but technology, we need the best ai so we have a turnaround in european innovation. >> you said you had $20 billion

to spend. do you still have appetite? fabrizio: i am focused on growth and committed to invest. we leave the world here in europe, disruptive innovation is what europe really needs. we have the people, so we are ready to go to become pioneer. >> are you convinced the price is right because some deals look

overpriced. are you convinced this is right? >> the price of europe is the problem. companies should value more and i think this is the right price, good premium, but the company is a 100 billion dollar company, this is the right price, we will be global leader and the capability of investment and growth, we are very confident.

anna: are you concerned about competition? some are worried about saturation. >> we are talking about food delivery, i forgot -- the business here is growing only in one country, we have competition but the best people in invest a lot in innovation and will be the global case. anna: thank you fabrizio for joining us.

tom? tom: anna edwards with that exclusive conversation. plenty more coming up, this is bloomberg.

>> welcome back. political landscape has been rewritten in germany. combined with spd, not enough. they do not need the greens. the far right party will be the opposition.

we will see if it comes to parse. let's flip the board and look at the euro, that is the picture, the euro is rubbing up against the 100 day moving average, they do not have a two thirds majority so bear that in mind today. mid-caps underperformed. the debt break is key, key. companies have 40% of revenues from domestic economy and the

dax is higher, will that be sustained? let's put the board. there is consensus about building out defense space. we will unpack election results hey, in germany. the opening trade is up next, this is bloomberg.

anna: i am