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    Cramer’s lightning round: L3Harris Technologies is still a buy

    Monday – Friday, 6:00 – 7:00 PM ET

    It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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    Dutch Bros Inc: “You’ve got to wait [to buy], because we still see wage pressure.”

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    Farfetch Ltd: “I don’t know FTCH. … I want to know about FTCH.”

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    Box Inc: “I say, move on. … I’m not kidding, I’d rather be in Nvidia.”

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    Sea Ltd: “I want to call that one too complex for me.”

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    Origin Materials Inc: “We’ve got to do some work on it, but I like it. I like it. I like what they’re up to.”

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    Bausch Health Companies Inc: “We’ve got that on what I would regard as being a retainer basis. We simply don’t know what to do. They don’t return our call.”
    Disclaimer: Cramer’s Charitable Trust owns shares of Bausch Health Companies and Nvidia.

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    A short-seller rattles Gautam Adani’s empire

    From meagre beginnings in the 1980s, Gautam Adani has emerged as India’s richest citizen. Now, in just a few days, the foundations of his sprawling empire have been shaken. On January 24th a small New York investment firm, Hindenburg Research, published a report calling the Adani Group “the largest con in corporate history”. In a series of statements, the group responded by saying that the report was “maliciously mischievous”, “unresearched” and intended to “sabotage” a secondary share offering of the group’s flagship listed company, Adani Enterprises. The group also said that Hindenburg had published its report “without making any attempt to contact us or verify the factual matrix”. “We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public,” wrote the group’s top lawyer, Jatin Jalundhwala. These fierce denials have not averted a sell-off of shares in Mr Adani’s seven listed companies, first right after Hindenburg’s report was published, then again when markets reopened on January 27th after a public holiday. In two trading days the collective market value of the Adani Group’s listed firms fell by $47bn, or 22%. Mr Adani’s personal fortune declined from $122bn at the end of 2022 to $93bn, according to the Hurun Report, a research firm. The episode has also drawn the world’s attention to one of India’s corporate success stories—and a significant motor of the country’s recent economic growth.In targeting Mr Adani, Hindenburg could not have selected a bigger whale. After dropping out of school at the age of 16, the entrepreneur moved through a succession of jobs, trading first in diamonds, then in metals and cereals, before entering the infrastructure business. Today his firms run some of India’s biggest ports, warehouse 30% of its grain, operate a fifth of its power-transmission lines, accommodate a quarter of its commercial air traffic, and produce perhaps a fifth of its cement. An affiliated Singaporean joint venture vies to be India’s largest food company. The Adani Group has also invested in strategically located ports in Australia, Israel and Sri Lanka. In the last financial year the group’s listed companies had total revenues of $25bn, equivalent to 0.7% of Indian GDP, and a net profit of $1.8bn. Their combined annual capital spending of around $5bn accounts for 4% of the total for all non-financial public companies in India. And Mr Adani’s plans are grander still. Between 2023 and 2027 the group is forecast to spend more than $50bn on investments, including in clean energy and hydrogen.Mr Adani is widely regarded as a master operator, with a genius for navigating the complicated legal and political landscape of Indian capitalism. Some investors have, though, occasionally expressed concerns about his group’s governance and opaque finances. That is the focus of Hindenburg’s report. It describes a complex network of funds and shell companies, some based in Mauritius, which interact with 578 subsidiaries spread through the seven publicly listed firms. Last year, Hindenburg claims, these entities engaged in 6,025 related-party transactions.Byzantine corporate structures are common in India and other emerging markets. But the report contends that the Adani Group is “engaged in a brazen stock-manipulation and accounting-fraud scheme”. The point of the complexity, Hindenburg alleges, is to manipulate the listed firms’ share prices and to shift money onto their balance-sheets “to maintain the appearance of financial health and solvency” amid high debts and relatively few liquid assets. As a consequence, Hindenburg wrote, valuations for the companies were overstated by as much as 85% and financial holes were temporarily papered over, despite severe shortages of liquid assets in five of the public firms. The group’s “obvious accounting irregularities and sketchy dealings” were enabled by “virtually non-existent financial controls”. Hindenburg claimed that Adani Enterprises had 156 subsidiaries but its reports were audited and signed off by a tiny accounting firm employing a handful of people, including some in their early 20s. Such allegations, the Adani Group said, have been “tested and rejected by India’s highest courts”. On January 27th the group released a PowerPoint presentation rebutting Hindenburg’s claims. Specifically, it noted that the group’s indebtedness is decreasing, and the operating companies’ debt issuance had been classed as investment grade by various rating agencies. It added that multiple accounting firms had been used to provide audits. Mr Jalundhwala said that Hindenburg’s report had led to “unwanted anguish for Indian citizens” and adversely affected the company and its shareholders. “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” Mr Jalundhwala wrote.Hindenburg responded on Twitter that it stood by its report and that it welcomed the prospect of legal action, especially in America. “We have a long list of documents we would demand in a legal discovery process,” the investment firm said.For the time being, the report has upended Adani Enterprises’ much-anticipated secondary share offering. This was intended to raise around $2.5bn in new capital, in part to reduce debt. The first stage of the offering, accounting for 30% of the capital-raising, took place on January 25th and was fully subscribed, raising $735m. Several prominent investors put in bids, including the Abu Dhabi Investment Authority, Life Insurance Company of India, and entities related to two American banks, Goldman Sachs and Morgan Stanley. Since then Adani Enterprises’ share price has fallen below the offer price. The bigger public portion of the offering, which began on January 27th and was meant to conclude on January 31st, has so far attracted almost no buyers. ■ More

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    CDC urges people with weak immune systems to take extra precautions after Covid subvariants knock out Evusheld

    The CDC urged people with weak immune systems to wear masks and practice social distancing after Covid subvariants knocked out Evusheld.
    Evusheld was a key antibody treatment taken by immunocompromised people as an added layer of protection.
    The CDC said it’s important to test and get treated with an antiviral if you do contract Covid.

    Children are seen outside a coronavirus disease (COVID-19) testing site in Brooklyn, New York, January 12, 2022.
    Brendan McDermid | Reuters

    The Centers for Disease Control and Prevention on Friday urged people with weak immune systems to take extra precautions to avoid Covid after the dominant omicron subvariants knocked out a key antibody treatment.
    These precautions include wearing a high quality mask and social distancing when it’s not possible to avoid crowded indoor spaces, according to the CDC.

    The guidance comes after the Food and Drug Administration on Thursday pulled its authorization of Evusheld, a combination antibody injection that people with weak immune systems took as an additional layer of protection to prevent Covid infection.
    The FDA pulled Evusheld because it is not effective against 95% of the omicron subvariants circulating in the U.S. This includes the XBB subvariants which are now causing 64% of new cases, as well as the BQ family that is responsible for 31% of reported infections.
    Although most Americans have largely returned to normal life as the Covid pandemic has ebbed, people with weak immune systems remain at higher risk of severe disease because they do not mount as strong of an immune response to the vaccines.
    Still, it is important for people with weak immune systems to stay up to date on their Covid vaccines by receiving the omicron booster because the shots can slash the risk of severe disease, according to the CDC.
    If you have a weak immune system and develop Covid symptoms, you should get tested as soon as possible and receive treatment with an antiviral within five to seven days, according to CDC.

    Available antivirals include Paxlovid, remdesivir or molnupiravir, but patients should talk to their doctor to find out which treatment is best. Some people cannot take Paxlovid due to how it interacts with other drugs they are taking.
    People with weak immune systems include cancer patients who are on chemotherapy, organ transplant patients who are taking medication for their transplant, people with advanced HIV infection, and those born with immune deficiencies.
    Some 7 million adults in the U.S. have a condition, like cancer, that compromises their immune system, according to the CDC.

    CNBC Health & Science

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    FDA proposal would allow gay men in monogamous relationships to donate blood

    The FDA on Friday proposed new guidelines that would ease restrictions on gay and bisexual men donating blood.
    The FDA said the policy would shift to an individual assessment that evaluates risk regardless of gender or sexual orientation.
    The American Medical Association and LGBTQ rights organizations have criticized the blood donor restrictions as discriminatory.

    A nurse fills test tubes with blood to be tested during an American Red Cross bloodmobile in Fullerton, CA on Thursday, January 20, 2022.
    Paul Bersebach | Medianews Group | Getty Images

    The Food and Drug Administration on Friday proposed new guidelines that would no longer require gay and bisexual men in monogamous relationships to abstain from sex before donating blood.
    The FDA had imposed a lifetime ban on men who have sex with men donating blood during the AIDS crisis in the 1980s. The agency had eased the ban in 2015, allowing gay and bisexual men to donate blood if they had not had sex in the previous year.

    In response to a blood donor shortage during the Covid pandemic, the FDA further eased restrictions in April 2020 to allow gay and bisexual men who had not had sex in the past three months to donate.
    Under the guidelines proposed on Friday, gay and bisexual men who are in monogamous relationships would be allowed to donate blood. But individuals, regardless of gender or sexual orientation, who have recently had anal sex with a new or multiple partners would have to wait three months before donating.

    CNBC Health & Science

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    “Maintaining a safe and adequate supply of blood and blood products in the U.S. is paramount for the FDA, and this proposal for an individual risk assessment, regardless of gender or sexual orientation, will enable us to continue using the best science to do so,” said FDA Commissioner Dr. Robert Califf on Friday. The Washington Post reported the news earlier.
    The American Medical Association had criticized the FDA’s restrictions on gay men donating as discriminatory.
    “At issue is the need to evaluate all potential blood donors on an equal basis based on their individual risk factors and without regard to their sexual orientation or gender identity,” said Dr. Gerald Harmon with the AMA in January of 2022.

    The Human Rights Campaign, the nation’s largest organization that advocates for LGBTQ rights, said the FDA proposal is a step in the right direction, but more needs to be done to to remove restrictions.
    “We urge the Biden administration to prioritize removing remaining barriers and ask the FDA to move expeditiously while ensuring the safety of the blood supply and a blood donation policy in-line with the science,” said HRC President Kelley Robinson in a statement.
    People who are taking oral medications to prevent HIV infection would not be allowed to donate blood for the three months following their most recent dose. Those taking injections to prevent HIV would not be allowed to donate blood for two years following their most recent injection.
    These medications, called pre-exposure prophylaxis, or PrEP, can result in false negatives on HIV tests, according to the FDA.
    Under the proposed FDA policy, anyone who has tested positive for HIV or taken medicine to treat an HIV infection would be banned from donating blood. People who have engaged in sex work or used illicit intravenous drugs recently would have to wait three months to donate.
    Blood banks would still be required to test all donations for HIV as well hepatitis C and B, according to FDA.
    Dr. Peter Marks, a senior FDA official, said the agency is evaluating the science to increase the number of people who are eligible to donate blood while maintaining safeguards that ensure the supply is safe for recipients.
    “We will continue to follow the best available scientific evidence to maintain an adequate supply of blood and minimize the risk of transmitting infectious diseases and are committed to finalizing this draft guidance as quickly as possible,” Marks said on Friday.  

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    The Fair Tax Act, explained: What to know about the Republican plan for a national sales tax, decentralized IRS

    Smart Tax Planning

    A group of House Republicans is supporting the Fair Tax Act, which would eliminate income, payroll, estate and gift taxes, to be replaced with a 23% national sales tax.
    The plan would also decentralize the IRS by slashing funding by fiscal year 2027, relying on states to administer the levy.
    Policy experts say the plan would make the tax system more regressive, meaning the burden decreases as income gets higher.

    John Miller | iStock | Getty Images

    A group of House Republicans is revisiting the Fair Tax Act, which would replace certain federal levies with a national sales tax and decentralize the IRS.
    While the plan may not get a floor vote and wouldn’t make it through the Democrat-controlled Senate, policy experts say the plan would make the tax system more regressive, meaning the burden decreases as income gets higher.

    Introduced in early January, the proposal would eliminate income, payroll, estate and gift taxes, to be replaced with a 23% national sales tax. The proposal also aims to decentralize the IRS by slashing the agency’s funding, relying on individual states to administer the levy.

    More from Smart Tax Planning:

    Here’s a look at more tax-planning news.

    While the plan was first introduced in 1999, it’s never been given a floor vote, and has only been supported by a small group of Republicans, said Erica York, senior economist and research manager at the Tax Foundation.
    “It’s not a mainstream or popular tax reform idea,” York said, noting the administrative side “doesn’t make a lot of sense” because it would involve 51 state agencies rather than a single IRS.

    It’s not a mainstream or popular tax reform idea.

    Erica York
    Senior economist and research manager at the Tax Foundation

    The reintroduction of the Fair Tax Act comes amid increased scrutiny of the $79.6 billion in IRS funding, enacted through the Inflation Reduction Act in August. The money has been earmarked for priorities such as enforcement, taxpayer service, technology upgrades and more.
    After months of critique, House Republicans in January voted to rescind the funding. But the plan was largely seen as political messaging since neither Senate Democrats nor the White House supported the measure.

    A ‘pretty significant’ tax hike for the middle class

    While the Fair Tax Act isn’t likely to gain traction in Congress, experts say the plan would be a significant change for middle-income earners and the wealthiest Americans.
    If it were enacted, middle-income earners would see a “pretty significant tax increase” and the wealthiest Americans would see the biggest cuts, according to John Buhl, senior communications manager at the Tax Policy Center.  

    He said the plan would make the tax system more regressive, despite the built-in monthly rebates for families below a certain income level, especially since the 23% rate is “tax-inclusive” and will actually cost consumers about 30%.
    What’s more, both experts say the sales tax wouldn’t be enough to make the plan “revenue neutral,” which may be an issue as Republicans fight for tightened spending amid the debt ceiling battle. More

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    Why desalination won’t save states dependent on Colorado River water

    States dependent on the drought-stricken Colorado River are increasingly looking toward desalination as a way to fix the river’s deficit and boost water supplies across the western U.S.
    The search for alternative ways to source water comes as federal officials continue to impose mandatory water cuts for states that draw from the Colorado River.
    Desalination plants are costly to operate, require enormous amounts of energy and are difficult to manage in an environmentally-friendly way, according to water policy experts.

    The Colorado River wraps around Horseshoe Bend in the in Glen Canyon National Recreation Area in Page, Arizona.
    Rhona Wise | Afp | Getty Images

    States dependent on the drought-stricken Colorado River are increasingly looking toward desalination as a way to fix the river’s deficit and boost water supplies across the western U.S.
    The search for alternative ways to source water comes as federal officials continue to impose mandatory water cuts for states that draw from the Colorado River, which supplies water and power for more than 40 million people.

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    Desalination (or desalinization) is a complicated process that involves filtering out salt and bacteria content from ocean water to produce safe drinking water to the tap. While there are more than a dozen desalination plants in the U.S., mostly in California, existing plants don’t have the capacity to replace the amount of water the Colorado River is losing.
    “Ocean water desalination has tremendous allure,” said Robert Glennon, a professor emeritus of law and water policy scholar at the University of Arizona. “The thought is that if we can just get the salt out of the water, everything can be fixed. But it’s a kind of siren song that will turn bad.”
    Desalination plants are costly to operate, require enormous amounts of energy and are difficult to manage in an environmentally friendly way, according to water policy experts.
    The debate over whether desalination could be a solution for the drying Colorado River comes as a historic megadrought grips the western U.S., generating the driest two decades in the region in at least 1,200 years. Water levels in the country’s two largest reservoirs, Lake Mead and Lake Powell, have hit their lowest levels on record.

    Pipes containing drinking water are shown at the Poseidon Water desalination plant in Carlsbad, California, U.S., June 22, 2021. Picture taken June 22, 2021.
    Mike Blake | Reuters

    The Biden administration has urged seven states in the Colorado River Basin to save between 2 million and 4 million acre feet of water, or up to a third of the river’s average flow. But water managers say that savings will need to be much more drastic as drought conditions worsen in the basin.

    Kathryn Sorensen, who directs research at the Kyl Center for Water Policy at Arizona State University, said that while there’s been some major progress on water conservation across the West, the Colorado River is severely overallocated and the low reservoir levels are “extremely problematic.”
    “We have been taking more water from the river than Mother Nature can really provide,” Sorensen said. “The river is a super important resource for all of us.”

    The cost of water is high

    Since desalination is a drought-resistant process, some have argued that states with such facilities could make themselves less dependent on water from the Colorado River. But the cost of desalination is high compared to the cost of imported river water and the process requires a great deal of energy to separate salts and other dissolved solids from water.
    Large-scale plants require “tens of megawatts” to operate, according to the Energy Department, and energy consumption is the largest component of the operational expenditures of desalination, comprising about 36% of the total operational expenditures.
    For example, the Carlsbad desalination plant in San Diego, California requires about 35 megawatts of electricity to operate. (By comparison, 1 megawatt is enough energy to operate a small town and 1,000 megawatts is enough to power a midsize city). The plant produces an average daily flow of 50 million gallons, only about 10% of the total drinking water needed by San Diego.
    The cost of desalinated water at Carlsbad is estimated at $2,725 an acre-foot, according to a recent analysis by environmental economist Michael Hanemann of Arizona State University. That’s significantly more than the amount the San Diego County Water Authority pays for water sourced from the Colorado River and the Sacramento San Joaquin River Delta. Last year, the Water Authority proposed increasing its rate to $1,579 per acre-foot for untreated water in 2023.
    “Desalination technology has improved greatly and it’s now remotely plausible to do,” said Jay Lund, co-director of the Watershed Sciences Center at the University of California, Davis. “But it’s only plausible if you’re willing to pay a lot of money.”

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    Water policy experts have also long debated the possibility of taking water from the Sea of Cortez in Mexico, the nearest sea to Arizona. In fact, Arizona officials in December voted to advance the study of a $5 billion project led by an Israeli company to build a plant to desalinate seawater in Mexico and transport it in a pipeline that would cross through the Organ Pipe Cactus National Monument.
    The company leading that project said it would deliver up to 1 million acre-feet of water to Arizona, roughly the amount that the central and southern part of the state used from the Colorado River in 2022. The first phase of the plan would be a single pipeline that would transport roughly 300,000 acre-feet of water to Arizona, with future pipes supplying up to 1 million acre-feet.
    If the desalinated water were to cost between $2,000 and $3,000 an acre foot for the Mexico plant, then the cost could potentially total up to nearly $1 billion each year for 300,000 acre-feet of water. And the cost could reach nearly $3 billion per year for 1 million acre-feet of water.

    The environmental costs to desalination

    There are also environmental costs to desalination. In addition to the greenhouse gases emissions produced from the large amount of energy needed to operate, the process leaves behind leftover brine, or concentrated salt water, which can raise the salinity of seawater and damage local marine systems and water quality as a result.
    Brine can contain toxic metals such as mercury, cobalt, copper, iron, zinc and and nickel, as well as pesticides and acids that cause irrevocable changes to the environment.
    “It’s difficult to bring desalination projects to scale because desalination is extremely expensive and there are real problems disposing with the brine that’s leftover,” Sorensen said.
    One study published in the journal ScienceDirect found that brine volumes are greater than most industry estimates, comprising on average a gallon and a half for each gallon of fresh water produced. The authors urged brine management strategies that limit the negative environmental impacts and reduce the economic cost of disposal.

    However, the most widespread current practice is to dump the leftover brine back into the ocean, which has led to the death of fish populations and corals as well as damage to seagrasses and fish larvae.
    California regulators last year rejected a $1.4 billion desalination plant in Huntington Beach, citing not only the costs of the water but the hazards to marine life and risks associated with sea level rise and flooding.
    Desalination will be useful in some areas of the country, especially as operating costs come down and more research is done on brine disposal. But water policy experts have suggested alternatives that are currently less expensive and energy-intensive and don’t pose environmental hazards.
    Lund said that fallowing lower value agriculture is a cheaper and better alternative from a national and state perspective, since agriculture uses approximately 80% of the Colorado River’s water. “It’s the cheapest and most sustainable way to bring the system back into balance,” Lund said.
    Reusing wastewater, conserving water and encouraging the reallocation of water are other sustainable solutions to water shortages that should take priority over desalination, Glennon said.
    “Desalination is not a silver bullet. There are immense challenges,” Glennon said. “We can do it, there’s no doubt about that — but it isn’t the only option.”

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    The outgoing CEO of a giant autos firm had a message for his successor: Don’t be like me

    After Akio Toyoda, CEO and President of Toyota, announced he was stepping down on Thursday, he shared his advice to his successor and his business philosophy.
    Photo by Yoshikazu Tsuno | Gamma-rapho | Getty Images

    After Akio Toyoda, the CEO and President of Toyota, announced he was stepping down on Thursday, he shared his advice to his successor and broke down his business philosophy.
    “Rather than try to be like me, I want you to value your individuality,” he said he’d once told the incoming chief Koji Sato ahead of an important meeting. Sato had been unsure what to say and what messages to express, Toyoda explained in a translated webcast on Thursday.

    “I told Sato ‘don’t try to run the company on your own, but as a team’,” Toyoda said.
    Having a team made up of people with “diverse personalities” to collaborate and focus on the same goal is key to innovating, he said. Toyoda added that making changes and adapting is crucial for companies going forward as no one knows what the future holds.
    Toyota is one of the biggest automotive companies in the world. It produces cars for everyday consumers, including a variety of electric and hybrid models, as well as being involved in motorsports through its Toyota Gazoo Racing brand.
    In its most recent quarterly report, published in November 2022, the company said its quarterly profit had dropped by 25% and made cuts to its production targets.
    Toyoda took over the company in the summer of 2009, just after the global financial crisis. It has been a difficult time since then, he acknowledged in the webcast.

    “In retrospect, these 13 years have been a period of struggling to survive one day after the next, and that is my honest feeling,” he said.
    Reflecting on how he managed the company throughout this time, Toyoda said that there are always two options to consider in tricky situations.
    “I believe that in times of crisis two paths appear before us. One is a path towards short term success or a quick victory. The other is a path that leads back to the essential qualities and philosophies that gave us strength,” he explained.
    Toyoda said that he chose the second option, which he said had helped him improve the company and establish trust in it from stakeholders by shifting what Toyota focused on.
    However, following this approach can be more difficult and take a lot of time before it proves to be successful, he added. People focused on short-term wins and therefore doubted him and were not supportive of his choice, Toyoda said.
    Toyoda is due to officially step down as CEO and president on April 1, and will then become chairman of the board. His successor Sato is currently chief branding officer and is the head of Toyota’s racing arm Gazoo and its Lexus division.   More

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    China looks past Covid as tourist bookings surge for the Lunar New Year

    “Pent-up demand is being released as many people rush to scenic spots, watch firework shows and crowd into restaurants and hotels,” Nomura’s chief China economist Ting Lu said in a report Thursday.
    Within China, reservations for stays at bed and breakfasts more than doubled from a year ago, while ticket sales for attractions grew by more than fivefold, according to Trip.com data for the first four days of the Lunar New Year.
    It’s less clear whether the surge in tourism implies consumption in China is well on its way to recovering from the slump of the last three years.

    BEIJING — People in China are moving past the pandemic and going out to travel, preliminary data for the Lunar New Year holiday show.
    “Pent-up demand is being released as many people rush to scenic spots, watch firework shows and crowd into restaurants and hotels,” Nomura’s chief China economist Ting Lu said in a report Thursday.

    China’s Covid “exit wave” is quickly ending as official data show a drop in infections, hospitalizations and deaths, he said. “China has been rapidly reaching its Covid herd immunity, as the government estimates about 80% of the population has already been infected with Covid.”
    The country saw a surge in Covid infections in December, just as Beijing ended nearly three years of stringent contact tracing and border controls. The seven-day Lunar New Year, which officially began Saturday, is the first major holiday since the end of China’s Covid restrictions.
    Within the country, reservations for stays at bed and breakfasts more than doubled from a year ago, while ticket sales for attractions grew by more than fivefold, according to Trip.com data for the first four days of the Lunar New Year.
    The travel booking site claimed that for those four days, reservations for hotels and other tourist activities exceeded levels seen for the same period in 2019, before the pandemic.

    People in mainland China were also eager to travel abroad.

    Flight bookings for travel from the mainland to overseas destinations during the first four days of the holiday quadrupled from a year ago, while related hotel reservations doubled, Trip.com said.

    Travel vs. big-ticket spending

    It’s less clear whether the surge in tourism implies consumption in China is well on its way to recovering from the slump of the last three years. Retail sales fell by 0.2% in 2022.
    Domestic daily trips for the Lunar New Year holiday travel period so far — since Jan. 8 — are up by about 50% from a year ago, according to the Ministry of Transport.
    But even the tens of millions of trips each day is still down sharply from 2019 levels, the ministry said.
    “Shopping mall foot traffic, new home purchases and auto sales data suggest big-ticket consumption may remain subdued,” Nomura’s Lu said.
    “Growth in passenger car retail sales in volume terms dropped noticeably to -21.0% y-o-y during 1-15 January from 3.0% in December, following the ending of the seven-month 50% purchase tax cut,” he said in the report.
    Chinese households’ penchant to save reached record highs last year amid uncertainties about future income and a slump in the property market. The bulk of household wealth in China is in real estate.
    For people in China planning to spend more at physical stores this year, supermarkets ranked the highest, followed by convenience stores, according to an Oliver Wyman survey in December. Shopping malls ranked lower.

    Read more about China from CNBC Pro

    However, sentiment can shift quickly.
    The study found that within just a week in late December, survey respondents became significantly more comfortable with venturing out.
    “We think that’s a very positive sign of resilience and how quickly consumer confidence will improve,” Oliver Wyman partner Imke Wouters said in a phone interview earlier this month. “Retail sales are directly linked to consumer confidence.” More