Hi Reader, here's what you need to know for April 23rd in 3:05 minutes.

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Today's big stories

Nestlé’s quarterly sales beat expectations, as the consumer goods giant benefited from both homebound customers and reopened restaurants
Tesla, NIO, and the other young upstarts won't be the only winners in the electric vehicle revolution – Read Now
Southwest Airlines posted better-than-expected earnings, and it might even stop losing money by June

Sweet Spot

What’s Going On Here?

Nestlé announced better-than-expected first-quarter sales on Thursday, as the world’s gradual economic recovery finally gave the Swiss giant the break it’s been craving.

What Does This Mean?

Get yourself a consumer goods company that can do both: the household snacks that stuck-at-home folks needed to endure their fifteenth lockdown in a row, and the supplies that Asian bars, restaurants, and shops needed to fling their doors open once again. That one-two punch drove Nestlé’s underlying sales – i.e. disregarding currency swings and new mergers and acquisitions – almost 8% higher than the same time last year. That was more than twice the growth analysts were expecting, and investors were cool with it: they sent Nestlé’s stock 3% higher.

Why Should I Care?

For markets: Extravagance is the new in-travagance.
Nestlé’s uptick in sales is just one of several signs that a consumer spending boom is in full swing. Here’s another one: professional investors have been noticing a trend toward more upscale products as shoppers spend the cash they’ve been saving over the last year, particularly among things like cosmetics, spirits, and clothing. Case in point: luxury brand Hermès and spirits firm Pernod Ricard reported an uplift in sales on Thursday.

The bigger picture: Chinese customers are spending big.
Strong results aren’t the only thing Nestlé, Hermès, and Pernod Ricard have in common: all three seriously benefited from robust consumer spending in China (tweet this). That’ll happen when Chinese consumers are given the freedom to shop as they please – a luxury that still isn’t being afforded to many Europeans and Americans. Companies that aren’t big in China, then, might be feeling a pang of regret. Or regrette, in Renault’s case: the French carmaker reported worse-than-expected earnings on Thursday, even as other carmakers like BMW and Daimler – both of which have big businesses in China – beat expectations.

You might also like: How to pick the most resurgent of resurgent luxury brands.

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2. Analyst Take

Tesla Just Can’t Shake The Classic Carmakers

What’s Going On Here?

Every automaker is in agreement: the future of the car is electric.

That might have something to do with why pure-play EV-makers – think Tesla, NIO, and Fisker – have outperformed the likes of Renault and Ford over the last five years.

Not just outperformed them, in fact: they’ve surged more than 1,500%, while the legacy carmakers have gained just 32%.

So you’d be forgiven for thinking that these EV-native upstarts have already made too much headway over their predecessors for them to catch up.

But there’s a very good reason analysts are much more optimistic about the prospects for incumbents’ shares than they are on the limelight-hogging newbies.

That’s today’s Insight: why you might be able to pick up some stock market bargains if you’re willing to go against the “Tesla takes all” narrative.

Read or listen to the Insight here

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