Initial problem is that npm install takes twice as long to install dependencies when vscode is running. I've figured out that this is because of file watching for node_modules folder so I added it to files.watcherExclude. I uses following combinations (but non of them seems to be working):

"files.watcherExclude": {
        "**/node_modules": true,
        "**/node_modules/**": true,
        "**/node_modules/*/**": true
    }

During rm -rf node_modules I notice that watcherService is having some load:

• VSCode Version: 1.19
• OS Version: Windows 10

Steps to Reproduce:

1. Add any folder to watcherExclude list
2. Perform any operation on said folder (i.e. delete it)

Reproduces without extensions: Yes