Before the bell: a quarter off

The European Central Bank cut interest rates by 25 basis points, while both Brederode and Adobe came out with figures that should be seen. Still, we expect Adobe to open lower later.

Investors’ attention was focused yesterday on ECB President Christine Lagarde. The European Central Bank cut interest rates by 25 basis points, but that was already known. What investors mainly want to know: when is the next interest rate cut coming? The next interest rate meeting is scheduled for Oct. 17, but that seems a bit too soon to us. Three months have passed since the last rate cut, leaving us to wonder why the ECB would be under pressure to cut interest rates again so soon now. December seems more logical to us, when the next interest rate meeting is scheduled. Gold prices went up after the interest rate cut, with stocks such as Barrick Gold (+4.2%) and Newmont Mining (+4.2%) able to rise sharply. This morning, gold prices ticked up to a new record of $2,568 per ounce, while in Japan, the yen continues to strengthen against the dollar.

On the corporate front, things are rather quiet. Walloon biotech company Celyad announced that it still has cash on hand for one more year before needing new capital. Champagne maker Vranken-Pommery had its board of directors meet to review half-year results. Sales fell 6.9% in the first half, while debt rose 4%. The revisions were limited. Immobel is on track to deliver 1,315 apartments this year. The group is suffering from a challenging real estate market that forced it to confess a monster loss of 8.87 euros per share this morning. The reason is a write-down on the Proximus Towers project and projects in Luxembourg, Germany and France. Soon we will get the US consumer confidence figures.

Where is the growth?

How do you become a company with a market capitalization of $260 billion? There are several ways, but Adobe succeeded by making itself indispensable to graphic designers, photographers and videographers. Programs such as Photoshop, Illustrator, Premiere Pro and After Effects are used millions of times a day by marketers, businesses and Web designers, among others. Not surprisingly, the group released better-than-expected figures yesterday. Revenue rose 11% to $5.41 billion, and earnings came in 12 cents higher than expected at $4.65 per share. Still, we expect disappointment later. Why? Adobe is a top performer, and investors therefore expect top results. That the group will see revenue and earnings stabilize in the next quarter will not be well received, in our view. We expect a lower opening.

Invest with the rich

Investing in private equity has several advantages: you get access to unlisted companies with potentially higher growth opportunities, private equity investors often take an active role in management and bring expertise, and returns are potentially higher. The problem? As a private investor, you often don’t have access to them, and only wealthy families can usually invest in them. At least, if you don’t know Brederode stock. The Belgian holding company has 2/3rds of its capital in private equity and offers a way for investors to co-invest with “the rich. Last six months, this private equity arm was able to book 139 million euros in profits. The other 1/3rd? That’s in companies like Alphabet, Unilever, LVMH, Nestlé, Sofina and Intel. Especially notable were the additional purchases in LVMH and Alphabet, while one also bought Microsoft. However, that other holding company, Sofina, was sold for two-thirds. The Van der Mersch family apparently has more confidence in its own investment abilities than in those of the other wealthy family behind Sofina, the Boël family.

Did you know…

many investors drop out as soon as they start investing? Of the 114,203 new investors who started investing in 2020, only 54% were still trading in 2021. Of that same group, only 35% invested in 2023.