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Key Events This Week: Global PMIs, US Durables and PCE

Key Events This Week: Global PMIs, US Durables and PCE

It is a relatively quiet week, and the biggest highlight for investors following the…



Key Events This Week: Global PMIs, US Durables and PCE

It is a relatively quiet week, and the biggest highlight for investors following the growth concerns that have roiled markets of late will be the global preliminary PMIs for May tomorrow. Central banks will also remain in focus as we will get the latest FOMC meeting minutes (Wednesday) and the US April PCE, the Fed's preferred inflation proxy, on Friday. An array of global industrial activity data will be another theme to watch.

Consumer sentiment will be in focus too, with a number of confidence measures from Europe and personal income and spending data from the US (Friday). Corporates reporting results will include spending bellwethers Macy's and Costco. After last week’s retail earnings bloodbath (e.g. Walmart and Target) these will get added attention.

On the Fed, the minutes may be a bit stale now but it’ll still be interesting to see the insight around the biases of 50bps vs 25/75bps hikes after the next couple of meetings. Thoughts on QT will also be devoured.

Staying with the US, for the personal income and spending numbers on Friday, our US economists expect the two indicators to slow to +0.2% and +0.6% in April, respectively. The Fed’s preferred inflation gauge, the PCE, will be another important metric released the same day and DB’s economics team expects the April core reading to stay at +0.3%. Other US data will include April new home sales tomorrow and April durable goods orders on Wednesday.

A number of manufacturing and business activity indicators are in store, too. Regional Fed indicators throughout the week will include an April gauge of national activity from the Chicago Fed (today) and May manufacturing indices from the Richmond Fed (tomorrow) and the Kansas City Fed (Thursday). In Europe, the May IFO business climate indicator for Germany will be out today, followed by a manufacturing confidence gauge for France (tomorrow) and Italy (Thursday). China's industrial profits are due on Friday.

This week will also feature a number of important summits. Among them will be the World Economic Forum’s annual meeting in Davos that has now started and will run until next Thursday. It'll be the first in-person meeting since the pandemic began and geopolitics will likely be in focus. Meanwhile, President Biden will travel to Asia for the first time as US president and attend a Quad summit in Tokyo tomorrow. Details on the Indo-Pacific Economic Framework are expected. Finally, NATO Parliamentary Assembly’s 2022 Spring Session will be held in Vilnius from next Friday to May 30th.

In corporate earnings, investors will be closely watching Macy's, Costco and Dollar General after this week's slump in Walmart and Target. Amid the carnage in tech, several companies that were propelled by the pandemic will be in focus too, with reporters including NVIDIA, Snowflake (Wednesday) and Zoom (today). Other notable corporates releasing earnings will be Lenovo, Alibaba, Baidu (Thursday) and XPeng (Monday).

Source: Earnings Whispers

Courtesy of DB, here is a day-by-day calendar of events

Monday May 23

  • Data: US April Chicago Fed national activity index, Germany May IFO business climate
  • Central banks: Fed's Bostic speaks, ECB's Holzmann, Nagel and Villeroy speak, BoE's Bailey speaks
  • Earnings: XPeng, Zoom

Tuesday May 24

  • Data: May PMIs for the US, Japan, UK, France, Germany and the Eurozone, US May Richmond Fed manufacturing index, April new home sales, Japan April nationwide, Tokyo department sales, UK April public finances, France May manufacturing confidence
  • Central banks: Fed's George speaks, ECB's Villeroy speaks
  • Earnings: Best Buy, Intuit
  • Other: Quad summit in Tokyo

Wednesday May 25

  • Data: US April durable, capital goods orders, Germany June GfK consumer confidence, Q1 private consumption, government spending, capital investment, France May consumer confidence
  • Central banks: Fed FOMC meeting minutes, ECB's Lagarde, Rehn, Panetta and Holzmann speak, BoJ's Kuroda speaks, ECB's Finance Stability Review
  • Earnings: NVIDIA, Snowflake

Thursday May 26

  • Data: US May Kansas City Fed manufacturing activity index, April pending home sales, initial jobless claims, Japan April services PPI, Italy May consumer, manufacturing, economic confidence, March industrial sales, Canada May CFIB business barometer, March payroll employment change, retail sales
  • Earnings: Royal Bank of Canada, Dollar General, Lenovo, Alibaba, Baidu, Macy's, Dollar Tree, Costco, Marvell, Autodesk

Friday May 27

  • Data: US April advance goods trade balance, April wholesale inventories, personal income, personal spending, PCE deflator, China April industrial profits, Japan May Tokyo CPI, Eurozone April M3
  • Central banks: ECB's Lane speaks
  • Earnings: Pinduoduo
  • Other: NATO Parliamentary Assembly begins, until May 30th

* * *

Finally, looking at just the US, Goldman writes that the key economic data releases this week are the durable goods report on Wednesday, the Q1 GDP release on Thursday, and the core PCE inflation report on Friday. The minutes from the May FOMC meeting will be released on Wednesday. There are several scheduled speaking engagements by Fed officials this week, including remarks by Chair Powell on Tuesday and a speech by Vice Chair Brainard on Wednesday.

Monday, May 23

  • There are no major economic data releases scheduled.
  • 12:00 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will discuss the economic outlook at an event in Atlanta. Audience and media Q&A are expected. On May 10th, President Bostic argued that a 50bp pace of hiking is “the pace we need to stay at—getting 50bp increases, maybe for the next two or perhaps three meetings, and let’s just keep this moving to make sure that we’re doing all we can to get inflation under control,” while also stressing that he does not think “we need to be moving even more aggressively” than a 50bp pace.
  • 07:30 PM Kansas City Fed President George (FOMC non-voter) speaks: Kansas City Fed President Esther George will give a speech at an agricultural symposium hosted by the Kansas City Fed. Audience Q&A is expected. On May 19th, President George noted that she was “very comfortable right now with 50 basis points,” and argued that “what’s more important [than estimates of the neutral rate] is at what point will we see inflation level out and begin to decelerate. That, I think, will tell us something about where we need to go with monetary policy.”

Tuesday, May 24

  • 09:45 AM S&P Global US manufacturing PMI, May preliminary (consensus 57.8, last 59.2); S&P Global US services PMI, May preliminary (consensus 55.3, last 55.6)
  • 10:00 AM Richmond Fed manufacturing index, May (consensus 10, last 16)
  • 10:00 AM New home sales, April (GS -2.0%, consensus -1.7%, last -8.6%): We estimate that new home sales declined 2.0% in April, following an 8.6% decline in March.
  • 12:20 PM Fed Chair Powell (FOMC voter) speaks: Fed Chair Jerome Powell will deliver welcoming remarks to the National Center for American Indian Enterprise Development 2022 Reservation Economic Summit. Text is expected. On May 17th, Chair Powell noted that “during the course of the [May FOMC] meeting it became clear that there was broad support in the committee for having on the table the idea of doing additional [50bp] rate increases … at each of the next two meetings.” Chair Powell noted that the Fed is looking to “have financial conditions tighten to the point where growth will moderate and still be positive, but moderate to the point where supply and demand can get back into alignment and where we can get inflation back down to 2%,” and stressed that “what we need to see is inflation coming down in a clear and convincing way and we're going to keep pushing until we see that.” Chair Powell argued that “there are a number of plausible paths to having a softish landing,” although he warned that “there could be some pain” as the Fed tightens monetary policy.

Wednesday, May 25

  • 08:30 AM Durable goods orders, April preliminary (GS -0.4%, consensus +0.6%, last +1.1%); Durable goods orders ex-transportation, April preliminary (GS +0.4%, consensus +0.6%, last +1.4%); Core capital goods orders, April preliminary (GS +0.3%, consensus +0.5%, last +1.3%); Core capital goods shipments, April preliminary (GS +0.5%, consensus +0.5%, last +0.4%): We estimate that durable goods orders declined 0.4% in the preliminary April report, following a 1.1% increase in March. Our forecast reflects lower commercial aircraft orders and a possible slowdown in new orders of core capex equipment.
  • 12:15 PM Fed Vice Chair Brainard (FOMC voter) speaks: Fed Vice Chair Lael Brainard will deliver remarks at the Johns Hopkins University School of Advance International Studies 2022 commencement ceremony in Washington. Text is expected. On April 12th, Vice Chair Brainard said that she expects “the combined effect of moving the policy rate to a more neutral level and commencing balance sheet reduction to have the effect of bringing inflation down, seeing some moderation in demand while the supply side catches up.” Vice Chair Brainard also noted that “core goods, which has been the source of an outsized amount of core inflationary pressure, moderated more than I had anticipated. It’s very welcome to see the moderation in this category. And I will be looking to see whether we continue to see moderation in the months ahead.”
  • 02:00 PM FOMC meeting minutes, May 3-4 meeting: The FOMC increased the federal funds rate by 50bp at its May meeting. Chair Powell said that further 50bp increases in the funds rate should be on the table at the next couple of meetings, but that a “75bp increase is not something the committee is actively considering.” We expect the FOMC to deliver two additional 50bp hikes in June and July, and to hike by 25bp at its remaining meetings this year.
  • The FOMC also announced the start of balance sheet runoff at the May meeting, with peak caps of $60bn for Treasury securities and $35bn for mortgage-backed securities. We expect that UST runoff will always hit its cap until the balance sheet reaches its terminal size, but MBS runoff will never hit its cap, especially following the very sharp recent rise in mortgage rates.

Thursday, May 26

  • 08:30 AM GDP, Q1 second (GS -1.7%, consensus -1.3%, last -1.4%); Personal consumption, Q1 second (GS +2.0%, consensus +2.9%, last +2.7%): We estimate a three-tenths downward revision to Q1 GDP growth to -1.7% (qoq ar) following Friday’s weaker-than-expected Quarterly Services Survey (QSS). Our forecast assumes downward revisions to consumption related to Omicron, partially offset by upward revisions to intellectual property investment and inventories.
  • 08:30 AM Initial jobless claims, week ended May 21 (GS 218k, consensus 210k, last 218k); Continuing jobless claims, week ended May 14 (consensus 1,310k, last 1,317k): We estimate initial jobless claims were unchanged at 218k in the week ended May 21.
  • 10:00 AM Pending home sales, April (GS -2.3%, consensus -2.0%, last -1.2%): We estimate that pending home sales declined 2.3% in April, following a 1.2% decline in March.
  • 11:00 AM Kansas City Fed manufacturing index, May (consensus 18, last 25)

Friday, May 27

  • 08:30 AM Personal income, April (GS +0.6%, consensus +0.5%, last +0.5%); Personal spending, April (GS +1.1%, consensus +0.7%, last +1.1%); PCE price index, April (GS +0.14%, consensus +0.2%, last +0.87%); PCE price index (yoy), April (GS +6.13%, consensus +6.2%, last +6.59%); Core PCE price index, April (GS +0.21%, consensus +0.3%, last +0.29%); Core PCE price index (yoy), April (GS +4.75%, consensus +4.9%, last +5.18%): Based on details in the PPI, CPI, and import prices reports, we estimate that the core PCE price index rose by 0.20% month-over-month in April, corresponding to a 4.75% increase from a year earlier. Additionally, we expect that the headline PCE price index increased by 0.14% in April, corresponding to a +6.13% increase from a year earlier. We expect that personal income increased by 0.6% and personal spending increased by 1.1% in April.
  • 08:30 AM Advance goods trade balance, April (GS -$114.0, consensus -$114.7bn, last -$127.1bn): We estimate that the goods trade deficit decreased by $13.1 to $114.0 in April compared to the final March report, reflecting a decrease in imports.
  • 08:30 AM Wholesale inventories, April preliminary (consensus +1.9%, last +2.3%): Retail inventories, April (consensus +2.0%, last +2.0%)
  • 10:00 AM University of Michigan consumer sentiment, April final (GS 58.1, consensus 59.1, last 59.1): We expect the University of Michigan consumer sentiment index decreased by 1.0pt to 58.1 in the final May reading.



Tyler Durden Mon, 05/23/2022 - 10:25

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CED Releases Report on Using Census Bureau Data to Boost Child Care & Employment

CED Releases Report on Using Census Bureau Data to Boost Child Care & Employment
PR Newswire
NEW YORK, June 28, 2022

NEW YORK, June 28, 2022 /PRNewswire/ — Today, CED released the fourth and final installment of its unique 2022 series that ana…



CED Releases Report on Using Census Bureau Data to Boost Child Care & Employment

PR Newswire

NEW YORK, June 28, 2022 /PRNewswire/ -- Today, CED released the fourth and final installment of its unique 2022 series that analyzes the role of paid child care in the economy—including its impact on labor force participation. The new report serves not only as a road map for researchers to build on CED's findings. The report is also useful to policymakers as they consider key questions related to the use of paid child care—especially for women—and its connection to the workforce and economic growth.

Specifically, the new report details how researchers can effectively leverage the underlying data from the Census Bureau's Current Population Survey (CPS), which CED used as the basis for its report series about paid child care. As detailed in the primer, the CPS is a monthly survey of US households jointly sponsored by the Census Bureau and the Bureau of Labor Statistics. As part of its Annual Social and Economic Supplement (ASEC), the survey includes questions about the use of paid child care since 2001 and about such expenditures since 2010.

"Our work uncovered several groundbreaking insights, including that boosting women's labor force participation by one percent—which more paid child care could help achieve—would generate nearly $73 billion of additional income for women," said Dr. Lori Esposito Murray, President of CED. "CED's series examines data more extensively and over a long a time period than any previous work. This fourth and latest report provides a foundation for the research community to discover additional insights, which will help inform public policies that generate more prosperity for the nation's families and the economy more broadly."

The report, The Economic Role of Paid Child Care in the U.S., Part 4: Child Care Data in the Current Population Survey, a Primer, covers five key aspects of the CPS data:

  • The design of the CPS and its Annual Social and Economic Supplement;
  • What specific data the survey captures;
  • The sources from which that data comes;
  • Best practices for using the data; and
  • Likely technical issues which come with the data and how to handle them

The series is the first deep analysis of paid child care usage mined from the CPS data. Findings highlighted from the first three installments in the series include:

  • A high price tag: In 2020, the average income of families using paid child care was $149,926.
  • COVID-19's impact on participation: From 2019 to 2020, children in paid child care dropped by nearly 20 percent.
  • The primary drivers of paid child care usage are labor force attachment, household income, and educational attainment.
  • Despite declining labor force attachment across all genders, men participate in the labor force at a higher rate than women.
  • Paid child care usage is directly impacted by maternal labor force participation trends.
  • A one percent increase in the labor force participation of women ages 18-54 would produce multiple economic benefits, including an additional income of approximately $73 billion.
  • Short-term changes in paid child care correspond with three key factors: labor force participation, actual hiring of mothers, and increased income.
  • Long-term changes in paid child care correspond with three different key factors: maternal labor force, real income, and the overall total of the male and female labor force.

The prior three reports as part of this series focus on 1) the link between paid child care and income; 2) the link between child care access and mothers' workforce participation; and 3) the economic benefits of increasing women's participation in the labor force. More information on the series, which was produced with funding from the W.K. Kellogg Foundation, can be found here.

About CED

The Committee for Economic Development (CED) is the public policy center of The Conference Board. The nonprofit, nonpartisan, business-led organization delivers well-researched analysis and reasoned solutions in the nation's interest. CED Trustees are chief executive officers and key executives of leading US companies who bring their unique experience to address today's pressing policy issues. Collectively they represent 30+ industries, over a trillion dollars in revenue, and over 4 million employees. 

About The Conference Board

The Conference Board is the member-driven think tank that delivers trusted insights for what's ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.


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SOURCE Committee for Economic Development of The Conference Board (CED)

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Copado’s Third Annual State of Salesforce DevOps Report Finds Teams Recovered from Last Year’s Dip in Quality but Struggle to Maintain Speed

Copado’s Third Annual State of Salesforce DevOps Report Finds Teams Recovered from Last Year’s Dip in Quality but Struggle to Maintain Speed
PR Newswire
CHICAGO, June 28, 2022

The longest running Salesforce DevOps report shows teams rebounding to p…



Copado's Third Annual State of Salesforce DevOps Report Finds Teams Recovered from Last Year's Dip in Quality but Struggle to Maintain Speed

PR Newswire

The longest running Salesforce DevOps report shows teams rebounding to pre-pandemic levels for change fail rate and time to recover 

Research shows how high-performing teams use commercial low-code DevOps tools to release more often, recover faster and achieve business value

CHICAGO, June 28, 2022 /PRNewswire/ --  Copado, the global leader in low-code DevOps, today released the findings from its third annual "State of Salesforce DevOps" report, which collects data and insights on the key trends in low-code software delivery. Based on thousands of data points collected from over 450 global Salesforce customers using DevOps to accelerate and improve the speed and quality of their implementations, the report highlights the improvement in quality, examines the possible causes of the decline in velocity, identifies the qualities of the teams that are thriving, and makes recommendations on how teams can maximize their development resources.

Adopting key principles from DORA, the report analyzed performance across Salesforce teams in terms of the dual goals of innovation velocity and release quality and security. Using the four metrics of lead time for change, deployment frequency, change failure rate and mean time to recovery, the report categorized respondents into four performance profiles that can be used to identify and measure the characteristics of both high and low performance.

Key takeaways from the Copado 2022 State of Salesforce DevOps report include:

Quality-first DevOps is increasing

The 2021 report found a significant reduction in quality and stability as evidenced by increased change failure rate and mean time to recover. Copado attributed that to the 2020 COVID pandemic and the ensuing disruption to team workflows. In 2022, that trend seems to have reversed, with stability returning to the 2019 levels.

Teams showed 8x shorter time to restore (96 hours in 2021 compared to 12 hours in 2022) and reported 50% lower change fail rate (38% in 2021 compared to 20% in 2022). In 2022, the change failure rates and recovery times were roughly the same as in 2019.

Salesforce teams tapped the brakes in 2022

Teams may have overcompensated for stability over the last year by reducing their velocity. This year's report shows a reduction in deployment frequency which dropped by half compared to the two previous years, from 475 per year to 230 per year on average. Elite performers continue to release faster with an average lead time of 8 days, compared to 50 days for low performers. Since 2019 the percentage of teams with lead times less than a week has declined from 69% to 49% and the number of users able to deploy on demand has shrunk from 23% to 10%.

Overall, compared to low performers, elite performers have:

  • 4x shorter lead times
  • 46x more deployments, 94% of elite performers release at least weekly vs. only 13% of low performers
  • 5x fewer production failures
  • 8x faster time to recover, less than four hours for elite performers and more than 18 days for low performers

"The last three years of research has taught us a lot about the challenges that Salesforce teams face and where they excel," said Andrew Davis, senior director of research and innovation at Copado. "Last year, the report showed the impact of a global pandemic and shift to remote work on the ability to ensure quality and stability. This year we've seen quality and stability trends bounce back. This points to the resilience and commitment of the community of Salesforce developers, admins, and business users who find a way. We've reached a point in time where the level of customization that can be built into the Salesforce platform makes it necessary to adopt DevOps tools and practices to manage software delivery well."

Salesforce teams continue to grow in size and complexity
For the second year in a row, Copado found that Salesforce teams are growing. This year, 46% of respondents report that their teams have grown, 41% have remained steady and just 13% report their team decreased in size. The continued growth in the size of development teams means a continued increase in the complexity of the Salesforce orgs they are building.

For the third year in a row, Copado found a strong correlation between team size and lead time. This year, there was also a correlation between team size and change failure rate and time to recover. All of these metrics worsened as teams grew in size.

Traditional use cases for low-code application development have been largely for internal business applications with limited business impact. In 2022, 72% of respondents use Salesforce for building internal applications, but now 60% are using the platform to build business-critical apps, and 66% are using the platform to build customer-facing apps, while 37% are building all three types. A much more rigorous release process should be applied to customer-facing and business-critical applications than needs to be applied to internal business apps. It should also be noted that these types of apps are usually much more sophisticated than internal apps.

Performance improves with commercial low-code DevOps tools
Low-code application development on Salesforce is the fastest way to translate ideas into innovation, but without enterprise software delivery capabilities in place, the power of low-code is undone by quality issues, manual processes and orchestration challenges. The report found that teams using DevOps tools designed specifically for Salesforce release 50% more frequently than teams using build-your-own platforms like Jenkins.

Copado also found that those who are highly involved in Enterprise Agile Planning (74% of respondents) and also use a commercial Salesforce tool for DevOps are 39% more likely to work at a company that is exceeding its goals. Given the current economic environment and growing importance of proving ROI and value realization for technology investments, teams that are investing in process improvements are better able to ensure that they're getting the greatest benefit.

Change failure rates can be reduced with automated testing
Teams need to shift to faster, more automated ways of ensuring quality. Automated testing of Salesforce applications is an opportunity area now that the Salesforce platform is used more often for external customer-facing and business-critical applications. Yet if there is any testing in the development process, manual testing is the most common method. One-third of Salesforce development teams use manual testing, 29% have minimal to no testing and 21% automate critical tests, while only 19% are practicing test-driven development.

The full report with a forward written by Peter Coffee, vice president of strategic research for Salesforce, can be found at:

Copado surveyed over 450 executives, managers, and members of Salesforce delivery teams to learn about their development lifecycles. Conducted in April 2022, the survey included companies ranging in size from one employee to more than 1 million employees. Sixty percent of these companies have more than 500 Salesforce users. The goal was to better understand the challenges of innovating on the Salesforce platform. The analysis was done on the Tableau Analytics platform including data visualization, cross tab analysis, and core BI. 

Salesforce and others are among the trademarks of, inc.

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About Copado
Copado is the leading DevOps and testing solution for low-code SaaS platforms that run the world's largest digital transformations. Backed by Insight Partners, Salesforce Ventures and SoftBank Vision Fund, Copado accelerates multi-cloud, enterprise deployments by automating the end-to-end software delivery process to maximize customers' return on their cloud investment. More than 1,000 companies rely on Copado to drive digital transformation with speed, quality and value including Boston Scientific, Coca-Cola, Fair Trade, Linde, MassMutual, Schneider Electric and Shell. Copado DevOps 360™ processes over 50 million DevOps transactions per month and is rated with a 100% score on the Salesforce AppExchange. More information can be found at:

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China Stocks Outperform On Unexpected COVID Shift

China Stocks Outperform On Unexpected COVID Shift

Update (0920ET): China’s move to ease quarantine rules for inbound travelers from three…



China Stocks Outperform On Unexpected COVID Shift

Update (0920ET): China's move to ease quarantine rules for inbound travelers from three weeks to just one week has bolstered sentiment for Chinese equities. 

Bullish calls are rising on Chinese stocks as the CSI 300 Index inches near a bull market. 

Fred Hu, the founder of China-based investment firm Primavera Capital Group, told Bloomberg that he believes Chinese tech firms have turned the corner after a $2 trillion rout sparked by Beijing's yearslong technology crackdown. 

NASDAQ Golden Dragon China Index plunged more than 76% since its peak in early 2021, coinciding with Beijing's crackdown start. The index hit a low in March and has since bounced 67% -- because the crackdown fears show signs of softening. 

Hu believes "this could be the beginning of a new era for China tech ... There's a lot of value to be discovered," adding that investors still need to be selective in picking stocks. 

Adding to support is the People's Bank of China's accommodative monetary policy, which is the opposite of global central banks that aggressively tighten interest rates to prevent the surge in inflation from turning into dreaded 1970s-style stagflation. Today's quarantine reduction news, tech crackdown abating, and PBOC easing have produced a more optimistic outlook for Chinese stocks. 

However, a lingering threat of a US slowdown could be problematic for all investors. 

Lorraine Tan, director of equity research at Morningstar, told Bloomberg TV: "Even if we do get some China recovery in 2023, which could be a buffer for this region, it's not going to offset the US or global recession."

* * *

China unexpectedly slashed quarantine times for international travelers, to just one week, which suggests Beijing is easing COVID zero policies. The nationwide relaxation of pandemic restrictions led investors to buy Chinese stocks.

Inbound travelers will only quarantine for ten days, down from three weeks, which shows local authorities are easing draconian curbs on travel and economic activity as they worry about slumping economic growth sparked by restrictive COVID zero policies earlier this year that locked down Beijing and Shanghai for months (Shanghai finally lifted its lockdown measures on May 31). 

"This relaxation sends the signal that the economy comes first ... It is a sign of importance of the economy at this point," Li Changmin, Managing Director at Snowball Wealth in Guangzhou, told Bloomberg

At the peak of the COVID outbreak, many residents in China's largest city, Shanghai, were quarantined in their homes for two months, while international travelers were under "hard quarantines" for three weeks. The strict curbs appear to have suppressed the outbreak, but the tradeoff came at the cost of faltering economic growth. 

The announcement of the shorter quarantine period suggests a potentially more optimistic outlook for the Chinese economy. Bullish price action lifted CSI 300 Index by 1%, led by tourism-related stocks (LVMH shares rose as much as 2.5%, Richemont +3.1%, Kering +3%, Moncler +3%). 

"The reduction of travel restrictions will be positive for the luxury sector, and may boost consumer sentiment and confidence following months of lockdowns in China's biggest cities," Barclays analysts Carole Madjo wrote in a note. 

CSI 300 is up 19% from April's low, nearing bull market territory. 

Jane Foley, a strategist at Rabobank in London, commented that "this news suggests that perhaps the authorities will not be as stringent with Covid controls as has been expected." 

"The news also coincides with reports that the PBOC is pledging to keep monetary policy supportive," Foley pointed out, referring to Governor Yi Gang's latest comment. 

She said, "this suggests a potentially more optimistic outlook for the Chinese economy, which is good news generally for commodity exporters such as Australia and all of China's trading partners." 

Even though the move is the right step in the right direction, Joerg Wuttke, head of the European Chamber of Commerce in China, said, "the country cannot open its borders completely due to relatively low vaccination rates ... This, in conjunction with a slow introduction of mRNA vaccines, means that China may have to maintain a restricted immigration policy beyond the summer of 2023." 

Alvin Tan, head of Asia currency strategy in Singapore for RBC Markets, also said shortening quarantine time for inbound visitors shouldn't be a gamechanger, and "there's nothing to say that it won't be raised tomorrow." 

Tyler Durden Tue, 06/28/2022 - 09:20

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