Finimize - ✏️ Central banks are swapping notes

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Today's big stories

The Bank of England and the European Central Bank pared down their rate hikes
Here’s what Tesla’s stock price should be – Read Now
Forecasts showed that mobile gaming's set to shrink for the first time since the smartphone era began

Copycat Central Banks

What’s Going On Here?

Both the Bank of England (BoE) and the European Central Bank (ECB) hiked interest rates on Thursday.

What Does This Mean?

There must be something in the air right now, because three big central banks made very similar moves this week. Back on Wednesday the Federal Reserve (the Fed) made headlines by slowing its hikes down to 0.5 percentage points, then two copycats – the BoE and the ECB – followed suit on Thursday. But a smaller hike's still a hike: they both upped rates by the same amount as the Fed, to their highest levels since 2008: that’s 3.5% in the UK and 2% in Europe. Considering that this is the BoE’s ninth straight hike and the ECB’s fourth, it’s no wonder those figures have crept so high. But with inflation on the wane in the UK and Europe last month, the central banks finally seem willing to ease up on the gas a little.

Why Should I Care?

For markets: Not out of the woods.
There's another reason hikes are less steep right now: central banks are trying to avoid tipping their economies into recession – but with the US and Europe circling the recessionary drain for a while now, that seems like a pretty tall order. Plus, inflation might have peaked, but it’s still miles too high. Central banks want it to be around 2% – and the Fed, the BoE, and the ECB have all warned more hikes are likely next year to help make that happen.

For you personally: Souped-up savings.
Higher interest rates aren’t good news for faltering economies, but if you’ve got savings set aside, this should come as music to your ears – especially after ten-plus years of rock-bottom rates. So whether you’re saving toward a short-term goal or biding your time until the stocks on your watchlist look like a bargain, don’t overlook the benefits of higher rates while your cash is sitting idle.

You might also like: 2022 was a scorcher, inflation-wise. 2023 won’t be.

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Analyst Take

Is Tesla’s Stock Actually A Little Too Low At This Price?

By Paul Allison, Analyst

Fans of Tesla haven’t had a smooth ride this year. Its stock is down 60%, and its price-to-earnings ratio is at an all-time low.

But you’ll need to do some forward-thinking if you want to understand whether the stock’s just hit a bump in the road, or whether it’s shifted into a permanent low gear.

See, valuing shares is about imagining all the profit that a firm will produce in its lifetime, and converting that profit into today’s money.

But forever’s a long time, so instead, I’m going to do something simpler: forecast the firm’s sales and profit ten years from now, value the future Tesla, and convert that value into today’s currency.

That’s today’s Insight: strap yourself in, we’re off to 2032 to have a look at Tesla.

Read or listen to the Insight here

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Welcome to the waiting game

Sometimes it can pay to wait.

Just think of stocks: they can tank under the pressure of a market downfall, but they might still have strong fundamentals that could set them up for success in the future.

The Motley Fool calls them “pullback stocks”: that’s the ones that have seen a big drop in their market value, despite often having healthy revenue and impressive innovations in the works.

And here’s an early Christmas gift for you: the Motley Fool just revealed the five pullback stocks that it’s keeping an eye on, and you can read the report for free.

Find Out More