tv Bloomberg Best Bloomberg July 24, 2016 5:00pm-6:01pm EDT
>> a raft of tech companies releasing results, and it could be rough sailing for some ceos. >> will you stay to see it through? >> donald trump is officially his party's choice for the presidency. big names in business tell bloomberg why they are choosing to back him. >> people do not want political dialogue, they want to see action. >> donald is such a good listener. businesspeople listen and learn.
that is all we do. rishaad: and christine lagarde has advice for the u.k. and the european union. >> it is worth being together, and it is the future. rishaad: plus, how turmoil in turkey is taking its toll on the market. it is all straight ahead on "bloomberg best." ♪ rishaad: hello. welcome. this is "bloomberg best," your weekly review of the most important business news, analysis, and interviews. let's kick things off with a day by day look at the top headlines, in a week that saw three of the world's most prominent banks report quarterly earnings. >> bank of america was out with this earnings report earlier this morning, and they beat
analyst estimates. but, second quarter profits fell by 21% year-over-year. what really stuck out for you? >> well, what stuck out for me across the banks is really the fact that interest margins coming in worse than expected, credit is solid. no one is talking about the fact that energy credit is stabilizing. that has really been the focus, this year to date. what analysts are focusing on is the consumer side. the trends are good. we are seeing reserve increases. there is a lot of talk about underwriting. i think really the bottom line worry is we know that rates will be lower for longer, we know pressure is going to continue there -- is the credit cycle going to turn? >> what about the growth side? the net interest margins look like they will stay solid. where is growth going to come from? >> they are arguing that they can keep net interest income stable, despite pressure on margins through loan growth. we saw very good loan growth at j.p. morgan. we saw growth at wells fargo,
perhaps not as much as some people had thought. that is the hope for analysts and investors, that they can offset some of the pressure through the loan growth. >> now to goldman sachs, the bank posting second-quarter results that beat on both the top and bottom lines. a 74% increase in profits. analysts focus on cost-cutting. as they have been, for the previous banks that reported. it is not really that big of a deal, how many percentage points they cut their expenses by? >> i think it is. when you have net income in the world with low interest rates, you have to look at expenses, as they do become much more important than they would otherwise. if we had rising revenues, then we would not be as concerned with the expense cutting. and we have not had rising revenues. >> goldman sachs says the u.s. bank is most reliant on trading. with the bond trading gains that really helped to boost the profit, investors seeing this as a positive, presumably? >> yes, very much so.
the fixed income was very nice compared to estimates. but i do want to point out that compared to some of the banks, the rise was not as good at goldman as some of the others. bank of america included. so we kind of are watching that in terms of thinking about goldman's market share. >> morgan stanley posting a profit that beat analysts estimates. management from up estimate and bond trading exceeding estimates. net income came in at $.75 per share, down from $.79 last year, but it beat forecasts of $.60 per share. >> everything seemed great. fixed trading was really great, and they have been paring back that business. what was the biggest negative in the report? >> the biggest negative would be compensation costs. analysts were expecting about $3.8 billion. they came in at a little over $4 billion. as we know, at the end of december, morgan stanley announced plans to cut 1200 workers, including 25% of the trading staff.
analysts thought that we would see that compensation cost come down a little. and it just did not quite as much as they thought. >> we have now heard from all six major u.s. banks. what were the common themes? >> things were not as bad as expected. estimates have been ratcheted down dramatically, for a lot of these banks. in most cases, they beat the estimates, and people are happy with that. but i would say overall, it wasn't a good quarter. in most cases, profit revenue was down, just not down as much as expected. fixed income was good for a lot of firms. trading was strong. the question is whether that is sustainable. >> the ecb leaves all three main interest rates unchanged. and the asset purchase program also unchanged at 80 billion euros every month. >> we continue to expect them to remain at present or lower levels for an extended time.
and well past the horizon of our net asset purchases. >> mario draghi says the central bank is ready, willing, and able to act if needed in the aftermath of the brexit vote, and what signal would it send to markets if mario draghi had announced changes? >> if mr. draghi had announced something more meaningful, that would suggest the impact of the u.k. decision to leave the eu was already being felt. clearly, that is not the case yet. what little data we have, in the u.k. and the eurozone, it is pointing at things turning out relatively ok, at least in the short-term. that is consistent with the ecb. >> the telecom giant verizon is said to be nearing a deal to buy yahoo! for $5 billion. what is the price tag signifying? is verizon going to buy
everything yahoo! has, or only portions? >> we do not know the real estate. verizon will not buy the ip. there is no deal formally done. that will probably happen over the course of the day and maybe the weekend. from where things are now, we hear the price tag is closer to $5 billion than $4 billion. somewhere in the upper $4 billion range, most likely, depending where things shake out. but the ip is not involved. the ip will be acquired by another party. verizon previously offered only between $3.75 billion and $4 billion, we had reported. this is quite a dramatic escalation from their previous bid. >> assuming it goes ahead and verizon gets yahoo! assets, what will an aol-yahoo! combination be able to do better than yahoo! was able to do on its own? it has been failing, losing market shares. what will aol add? aol will add very good ad technology that can be partnered
with yahoo!'s ad technology. it is about taking the cost out of yahoo!, as it is pairing it with aol and coming up with some sort of strategic benefit. there are a lot of operational synergies, job cuts, and you can expect verizon will go through yahoo! and cut the fat in essence. that is part of what this transaction is all about. rishaad: coming up, the earnings drumbeat continues with the reports from some major technology companies. plus, we will be taking a look back at a turbulent week for the turkish economy. up next, more business headlines from mergers, acquisitions, lawsuits, and investigations. technology companies. this is bloomberg. ♪
>> this is "bloomberg best." i'm rishaad salamat. let's continue our global tour of the week. the record-setting purchase of a british chip designer by a japanese telecommunications company. softbank is buying chipmaker arm in a record $32 billion deal. was it brexit bargain-hunting? >> they surprised everyone. arm does not fit inside softbank in any way, shape, or form. it is not something that softbank had, and it is a complementary acquisition. that being said, arm is a very solid and good investment. they are going to let it run independently. the decisions will stay in the u.k. like i said, a steady cash flow, cash generation business. given their biggest deal was sprint, they need a steady the decisions will stay in the cash-generation business, and they hope arm will be that. manus: pimco turns to the hedge fund world to get a new ceo.
who is the man, and why go to the hedge fund world if you are pimco? >> he has had a long and successful career in the hedge fund industry. he came in as the ceo of man group. he was previously coo. he started as ceo in 2013. after that, you saw assets increased by 1/3 through acquisitions. the share price doubled in about two years. it was a company under pressure, and he did a great job taking it to the next level. pimco is a different beast from man group. i think he will now be tasked with replicating that, and really taking this company, restoring it to some of its former glory. >> do you see things changing at pimco in a big way with this
talent acquisition? >> that is a big question. manny roman has expertise in a wide range of hedge fund strategies. he has got expertise in bonds, which is what pimco specializes in, but he has more than that. one question is whether this will see pimco move into new things. in particular, he is a proponent of computer-driven trading. emily: unilever is scooping up dollar shave club, getting a bigger piece of the fast-growing men's grooming business. the terms of the deal were not disclosed, but according to bloomberg sources, it is worth a billion dollars. dollar shave club is a direct consumer model for an established razor brand and is on track to post $2 billion in sales this year. >> it is a wonderful addition to the unilever family. there's a $30 billion male grooming market out there. unilever, if you exclude shaving, is by far number one in that market. this is a subscription model -- which is interesting anyway, when more and more shopping goes through different channels -- that is based on male grooming and shaving.
we think this acquisition is very strategic. >> roger ailes is out as head of fox news channel following sexual harassment accusations, which he denies. he will be succeeded by rupert murdoch. analysts seem generally sanguine about this. even though fox news is 20% to 25% of 21st century fox's profits. is that because it is rupert murdoch, the guy who runs the whole company, and not a lot is expected to change? >> most investors do not think there will be much of a hit. fox news is about 25% of total cash flow, it is important. they are dominant player. near term, not much of an issue, particularly going into an election year where audiences will be big. >> is ailes leaving at a good moment? the demographic average age is 65. is this the high watermark?
>> it very well may be. their core is extremely profitable, but any new leader has to develop new business. rishaad: it has also been a week of disconcerting business. a slew of headlines involving lawsuits, investigations, and that rounds up our coverage on bloomberg television. >> truck makers paying eu regulators a record $3.2 billion fine for fixing truck prices over 14 years. >> it is a big fine. but we're talking about a very damaging cartel. it lasted for 14 years. it affected all of the european economic areas. these are very important vehicles for the entire european economy. and these are the elements that go into our fining guidelines in order to calculate the fine.
i think it was justified with this high amount. rishaad: takata shares under severe pressure after the airbag makers say they routinely manipulated testing data. what prompted this? >> lawsuits prompted it. these faulty parts have led to fatalities. there have been a wide range of lawsuits against the company. part of the response was to hire a professional to do an audit of the company. what the audit discovered was that takata has manipulated the data, partly by adjusting it to make the performance of their parts look more consistent. they basically reduced the variability of the responses to testing. the word the auditor used was to make it look prettier. of course, this is basically manipulating the data, and something that will definitely come back to haunt the company. >> another key corporate movement that we want to keep an
eye on is volkswagen. it has been down, facing fresh allegations from the u.s. state officials. the claims include emissions cheating went on longer than the company acknowledged. and the incumbent ceo has been aware of it for a decade. these latest allegations, what do they mean? they are coming in late. >> they are. that is why it is a blow to volkswagen. they thought they were through the worst of it. they got the u.s. settlement out of the way. so what happens? they get blindsided by u.s. attorneys general, which are leveling serious allegations. >> what is the tactic vw has to volkswagen. play? >> that will be the hard thing. what the attorneys general are after is not necessarily compensation for fixing environmental damage and the legal damage the cars did -- they are actually after retribution. that is a different scenario than volkswagen faced before. manus: two people familiar with the matter say a senior manager at hsbc was arrested in new york for his role in a conspiracy to rig currency benchmarks.
let's start from the top. what have we learned? >> we know mark johnson, the head of global fx at hsbc, was flying into jfk. he was apprehended and arrested. we are expecting charges. we understand it will be wire fraud. and it is related to the forex currency investigation. the department of justice has been working on it for at least three years. what will happen, we are not really sure. that is still up in the air. rishaad: the malaysian government has been pledging to cooperate with lawful investigations as u.s. prosecutors seek to seize $1 billion in assets linked to the embattled state fund. the fund has denied having assets in the u.s. what is new? what do we know? >> what we know is what we had from the malaysian government. they say they will fully cooperate. that if any wrongdoing is proven, the law will be enforced.
one minister also pointed out that any claim must be treated with caution. it must follow due legal process. all of the reaction, after u.s. prosecutors said they will take action to seize assets worth $1 billion. civil lawsuits have been filed. prosecutors say that billions misappropriated from 2009 to 2015. >> the u.s. government is moving to stop two big takeovers in the health care industry. the justice department has filed antitrust lawsuits against anthem's acquisition of cigna and the takeover of humana. if the deals do go ahead, they would consolidate the nation's five biggest insurers into just three. >> they say both would harm innovation and competition. the aetna-humana deal would affect the medicare advantage market in particular. anthem-cigna is the market sold to employers as well as other regional markets. scarlet: this could tie things up in the court for months or years? >> humana and cigna both came out and said this deal is not going to get done this year, we are looking at 2017. cigna is questioning whether the deals can get done at all. ♪
swing. companies rolling out quarterly results. tech firms catching the lion's share of investor attention. emily: netflix plunging 15% on disappointing earnings. subscriber growth dropped, adding just 1.7 million subscribers, most of them abroad. ceo reed hastings says it is due to price increases, not market saturation. is that the reason? cory: we know that they lowered the cost of marketing, at the same time as they raised prices last quarter. we can see the u.s. subscriber growth fell to 0.3% sequentially. my model goes to 2012. i think that is the lowest ever reported. they are spending so much, being forced to raise prices because content costs are getting out of
control. they've got over $12 billion in off balancing content cost, that is raising prices, and that is causing new subscriber growth to slow. emily: ibm beating estimates despite its 17th straight quarter of revenue decline. it seems the company's big bet on watson may finally be paying off. revenue, including the artificial intelligence platform, rose 3.5%, the first growth since the revamp. >> this was a meh quarter for ibm. the strategic imperatives group that includes watson and the cloud business, the cyber security elements of ibm, all posted growth. one of the interesting parts, although it is 38% now, the revenue growth of this group has been declining year on year. something to watch over the last four quarters and into the future. the other segments continued to post some weak numbers on a cost currency basis and as reported basis. the hardware segment continues to be a thorn in ibm's back, if you may. bloomberg intelligence's view is that it is a meh quarter. >> let's go to scandinavia. numbers out of erickson, the wireless network company competing with nokia. they are saying the negative trends from the first quarter intensified.
they are taking further actions, initiating cost-cutting and targeting. >> why is the ericsson ceo so pressured by ambassadors? it is a changing world. he is trying to rebalance ericsson. net sales, 54.1. that missed what the markets actually expected. he is going to be under more pressure today, won't he? >> yes, i think he is. he has been with the company as ceo for 6.5 years now. during that time, he has not delivered much of a share price gain at all. it is basically flat during his tenure. there have been rumblings over the last year. essentially, he is under pressure to deliver better and more cost cuts to the company. it is a very competitive market. >> are you set to remain at ericsson? are you fearful that institution shareholders could harry you from your position? >> we are doing lots of transformation. changing the corporate structure.
we are on the forefront of 5g. we are going into new areas. >> will you stay to see it through? >> i think my job is to continue. that is what i'm focused on. emily: microsoft flying high on the cloud. the company reported fourth-quarter profits topping analysts' estimates. fourth quarter coming in up 2% from the same quarter last year. the ceo's aggressive push is booming revenue. the company's corporate cloud platform doubled revenue this quarter. break it down for us. where do you see the bright spots, and where do you see challenges? >> microsoft is doing well in making the shift from paid on-premises software to using cloud services. it is a big shift to go from that sort of private stuff to using shared stuff that gives you better value and a different experience.
the challenges for them are, as mentioned, the flatlining of the growth of pcs, although windows revenue was up in the most recent quarter. the decline of the phone business, for them, once they admitted they cannot easily take the nokia acquisition and bump into being a big player in phones. what we see today is continued progression in microsoft's ambitions and the continued challenges around pc's, and then figuring out how to grow the enterprise software business that they call dynamics. >> sap reported second-quarter results that topped analyst estimates. operating profit was 1.52 billion euros, being forecast at 1.45 billion euros. the company put a week start to the year behind it, and closed more software deals, despite political turmoil in europe. you say despite the widespread concerns, there is no effect from the brexit vote. is that because there was not
enough time to react? do you expect the third-quarter to feel pain? >> we see a robust and ever-increasing pipeline for our technology. what is interesting about brexit specifically, just like the greek debt crisis, the china growth issue, our software tends to be very resilient in choppy waters, because business executives start thinking a lot about customers, channel strategies, inventory levels, supply chains, financials, and the real-time data to make smart decisions. our new architecture is in the center of helping them solve those problems, which is why we tend to be very resilient. >> g.m., the highlight is they are boosting their full year earnings view. you have a beat on the top and bottom line. earnings coming in $1.86 per share and revenue a staggering $42.4 billion.
>> as an investor, you want them to beat the earnings guidance for the rest of the year, and that is exactly what they have done. $6 per share is the forecast. raising guidance, too. >> we have just gotten these numbers, as have you. give us your overall take. they look pretty good. is there a problem in these? >> there is not really a problem in the numbers, the question is if the investors will look at the numbers and see something they can act on. g.m. has been showing profits for many quarters in a row. i believe this is the fourth time or fifth time they have exceeded estimates. it just is not moving the needle on the stock, because people are looking at uber and tesla for the future of autos. >> take us through the top numbers that you think we should be looking at. >> we had outstanding results in the second quarter, driven by outstanding performance in north america. another record quarter for north america, $3.6 billion in profit. 12.1% margins. continued strength in china.
half a billion dollars of equity income and strong income margins. and importantly, profitability in europe. the first profit we have had there since the second quarter of 2011. tremendous work by the entire team. >> general electric posted second-quarter profits that beat estimates. they have been getting rid of the finance operations and want to focus on equipment manufacturing. the company is betting on businesses such as energy and innovation. the ceo is also building a software unit. >> take a look at net profit, that was up 313%, revenue up 2%. where is the issue? >> they did beat expectations on both profit and revenue. but that was helped in part by a gain on their sale of the appliances business this quarter. you have also got a decline in orders.
they did finally get out of being a too big to fail financial institution during the quarter, and that will free up a lot of capital. we are still waiting to see what exactly is going to happen. >> coming up on "bloomberg best." evaluating donald trump. bloomberg digs into his financial worth, and two business titans weigh in on his presidential potential. we have highlights from tom keene's exclusive conversation with christine lagarde. this is bloomberg. ♪
>> his net worth has gone up $2 billion to $3 billion, which is less than the $10 billion he claims. david: how confident are you in these numbers? >> you never know what a building will go for until it actually sells. some of trump's assets, these trophy resort properties, you could expect maybe someone would pay a healthy premium above the revenue his businesses are generating, just for the sake of owning them. on a numbers basis, a finances basis, we feel pretty confident in the range we are in. david: he has also borrowed a fair amount.
>> he has a $170 million loan out against the new hotel he is building in washington, d.c. he is renovating the old post office there. it is expected to open in time for the election in november. david: do you get a sense of how much liquidity he has? he needs to fund his own campaign. how much cash can he reach quickly? >> using the high of the disclosed ranges, he has about $170 million of assets he could liquidate immediately. mr. trump: i humbly and gratefully accept your nomination for the presidency of the united states. >> it's official. this week, donald trump formally secured the republican nomination for the u.s. presidency. two people explained their support for trump in interviews
with bloomberg. >> what would donald trump as president be able to do with unconventional monetary policy? >> to sit down and say, when you have deficit financing, we don't have the gold standard anymore, we are printing money. do we go back to gold? no. but nobody knows what that means. we have a group of central bankers with quantitative easing that no one understands - my wages are less than interest on the debt. so what just happened? >> i get that it is a problem, i want to know what he should do about it. what should he do about the tax code? the federal debt? >> you need to ask him specifically, but what you need to do is shatter the old system. you cannot affect a bureaucracy unless you crack it.
the bureaucracy will tell you that you need them and you need to move slowly. you cannot move slowly. we are dying. we are on the hospital bed, we have social inequality, division, civil disorder. look what's happening around the world, look what's happening in turkey. what is happening with brexit. people don't want any more political dialogue, they want to see action. step in the middle of the fray and break it up. >> other business leaders have expressed some kind of worries about trump. you are the quintessential businessman, you live the american dream, you do your due diligence on any deal. trump is the ultimate deal for the u.s. talk us through your process of due diligence for trump that you did. >> a lot of people have not seen the side that i have seen. the fact that donald is such a good listener.
business people listen and learn. that is all we do. he is certainly one of the best at that. he has demonstrated that so many times to me. i'm involved with the trump leadership council, all the business people that are part of that. he demonstrated that he knows so much about all the sectors that cross into our economy. he has demonstrated also that he will listen and learn everything he needs to know to move forward. >> part of that has been listening to you. trump calls you the king of energy. there are some reports that you could be considered to become the next energy secretary of the u.s. if trump wins. would you take it? >> nothing has been talked about in that whole area at all.
certainly, i would be honored if that was offered. but i have not given any thought to that at all at this point. >> also this week, the imf managing director sat down with tom keene for an exclusive bloomberg interview. she shared her thoughts on the uk's uncertain future in the european union. tom: after the success of the brexit referendum, what is the path you can take to assist prime minister may to move the united kingdom forward in their negotiations with brussels and europe? christine lagarde: there has been significant progress in the macroeconomic situation of great britain over the last five years. we have seen it. we have seen a move from a 10% fiscal deficit to more than half that now. my recommendation would be to
really reduce the level of uncertainty, identify clearly what the goals are, identify the timeline. and as philip said, understand that it will take time, but it will require understanding on both sides in order to eliminate the trade uncertainty, the regulatory uncertainty, the passport uncertainty. there is a whole range of issues which need to be addressed, which have brought the european countries together. clarity of intent, rapidity of execution, identification of both the goal and the timelines would be very helpful. tom: are you pleased with what you see out of european leaders so far? we're focused on the united kingdom.
are you pleased with the messaging from chancellor merkel and others within europe? christine lagarde: for the moment, they have not decided to lay out the terms and the space and the maneuvering they all want to offer or expect from their partner. i understand that, because there has to be certainty about the timeline. the two years which will be triggered by this article 50 has not yet been invoked. i can see why they would not want to put their cards on the table yet. if the united kingdom moves in the direction of what i hope, purpose, clarity, indication of timeline, europeans should respond. my hope, my real hope as a european, is that the european leaders will find the strength and determination to bring about those structural reforms,
>> you are watching "bloomberg best." last week, turkey faced a political cataclysm as the erdogan government repelled an attempted coup. this week, the nation felt painful economic repercussions. turkey's financial markets, currency, and credit have been reeling since the uprising, as we explored in detail on bloomberg. >> the lira is rebounding. it has recovered half its loss since the coup. >> many people saying this is erdogan's chance to galvanize
power even more. >> right, that is what erdogan has wanted for a few years now. he changes the parliamentary system to a presidential system, where he holds the levers of power in his hand. >> talk to me about the flow of money. nearly $16 billion came back into turkey in the first five months of this year. that is what is at risk here. >> that's exactly it. this year, the first five months have been especially strong. you had the return of foreign capital to turkey. as opposed to last year, when there was actually an outflow in the same months. the question is whether that will continue or not. it will certainly make a lot of
investors nervous. >> is turkey investable right now? >> not at this time, given the level of uncertainty. >> how will this impact european investment? this is very near for europe. does it add a discount to the european investor story? >> it is still spillover of what happened in the city, it does play into the political risk. but maybe not at this stage. but if things were to get bad, then it would be something to take into account. >> a measure of turkish debt risk rose for a third day, and bonds fell after an investor service signaled it was considering cutting the country's credit rating to junk. the central bank also lowered borrowing costs. we are watching the lira at the moment. this consideration about cutting turkey's credit rating, is that based more about politics or economic fundamentals?
what is different about what happened on the weekend? >> very good question. there's two elements. one is political risk, which has been present in turkey for some time. what happens over the last few days, or just the manifestation of the very shifting type of political landscape we have. that has implications on growth potential, the advancements or lack of economic reform, and also exposed the countries to potential external shocks. >> what do you make of the central bank's decision to slow the rate cuts? does that have any impact on your judgment? >> like any central bank, they have to react quickly. one thing that helped the markets to absorb the news today
and yesterday is the fact that they made some announcements over the weekend about maintaining significant liquidity in the banking system, to make sure that the market turbulence, at least in the initial stage, is contained. >> i want to ask you about turkey and what turkey has done to stabilize matters after the attempted coup. has it done enough, and what further impacts could we see on financial markets? >> financial markets have been somewhat volatile. the central bank, other authorities have done a good job of reassuring the economy and the markets, and particularly, the central bank has provided ready liquidity to the financial system, to prevent it from seizing up.
so, in that context, the economic developments will be driven more by the political events that occur. i think the authorities there have reacted promptly and energetically to contain the damage. matt: more repercussions in turkey. s&p has downgraded its rating on turkey, lowering it to bb from bb plus. s&p also cut its outlook to turkey to negative. this added even more pressure to the turkish lira, which weakened to a record low against the dollar. how big of a deal is this for turkey? >> this is a big deal. their financing costs are climbing, people are selling financial assets. >> of course, the president's emphasis right now is on consolidating political control and less on assuaging investors. >> if he calms the political situation, investors will go with it. >> and the president taking further action overnight,
declaring a three-month state of emergency. people like to invest in places where they can count on the rule of law. does that apply to turkey? >> to the extent the government wants to apply it at this point. the government has come out to say this will be limited, this will not have an effect on turkey's democracy. as you can see, in the reaction in markets, investors don't seem to be buying that quite yet. >> you are going towards an environment that is not investor friendly, some european large banks or corporations will have a serious issue in the future, potentially. ♪
this function here -- it gives you a good idea of where the trade flow is for the united kingdom. top of the agenda is germany. >> a snapshot of the earnings scorecard so far. here, we can highlight how well the financials have done right here. on average, sales have surprised by 2% and earnings per share have surprised by 6.5%. better than the s&p 500 at large. >> there are about 30,000 functions on the bloomberg and we always enjoy showing you our favorites on bloomberg television. maybe they will become your favorites. here's another one you will find useful. it will bring you to our quick takes, where you can get context -- this week's quick take examines the issue of independence for scotland. >> scotland has claimed credit for giving us television, penicillin -- it is also home to an independence movement that
refuses to die. in 2014, the scots had a vote. did they want to break away from england and the rest of the united kingdom? 55% voted no. that was less like an end than the start of something new. a change in scottish politics. a large part of the reason why scotland rejected independence in 2014, fear the economy was not strong enough -- fear ties to the european union would be cut. when the u.k. voted to leave the eu, scotland voted overwhelmingly to stay. >> scotland faces the prospect of being taken out of the eu against our will. i regard that as democratically unacceptable. >> the first minister enjoys widespread support.
membership exploded after the referendum. some 20,000 members on the day of the vote to 115,000 the next year. in the 2015 general election, the snp won many seats, making it the third largest political party. now, brexit has given the cause another boost. is this going to move scotland to independence? for them, brexit changes everything. this is the opportunity the movement has been waiting for. >> a second independence referendum is clearly an option on the table. it is very much on the table.
>> while brexit may have sped up the possibility of another run at independence for scotland, it's also made the prospects far trickier. opponents say the economic case for independence is even worse now than it was in 2014. scotland's economy would be underpinned by oil. they say that the plunging crude prices show that going it alone is too risky. questions remain about what would happen with scotland's trade with the rest of the u.k. even if scotland gets as far as independence, it will have to convince eu member states it is worthy of joining their club. it is worrying how sympathetic members may be, if they are battling separatist movements of their own. >> that was just one of the many quick takes you can find on the bloomberg. you can also find them on bloomberg.com, along with all the latest business news and analysis, 24 hours a day. thank you for watching.