The contraction stands at 4.8% - despite a 2% increase in the first half of March

• Deserted Times Square // Photo: Reuters

Wall Street opened sharply up to 3% yesterday in various indices, in light of Giliad's report of positive signs on the way to finding a cure for the Corona virus. Alphabet, Google's parent company, jumped almost 10% after posting a 13% increase in revenue in the first quarter of 2020 compared to the same period last year. 

Advertising revenue from the YouTube site increased to $ 4 billion. On the other hand, net income of $ 6.8 billion was slightly below expectations, but still higher than 2019. In the commodities sector, WTI oil rebounded to almost $ 16 a barrel - 25% more than the day before, and Wall Street's day closed down as much as 1.5%. 

Yesterday's gains were in spite of weak macroeconomic data from the US economy, released yesterday, which indicated a 4.8% contraction in the first quarter of this year (January-March). This is the first time the US economy has contracted since the first quarter of 2014. These are also the weakest figures since the 2008 recession and worse than projections, which have estimated a 4% contraction. Consumer spending, which accounts for 70% of US economic activity, plunged 7.6% - a 40-year low. The retail sector fell by 8.7% in March alone - the lowest figure since 1992.

Remember, restrictions against the Corona came into effect only in the middle of March. By March 15, before the Corona restrictions came into effect, the US economy was up 2% - meaning that in just two weeks, 6.8% had fallen. This is a very worrying indication of the current quarterly data (April-June), during which the economy was dramatically hit by the Corona. According to White House estimates, the current quarter will end with a 30% -20% contraction.

Meanwhile, digital currency Bitcoin crossed the $ 8,000 unit and was trading at 8,400 yesterday, up 30% in the past month and 15% year-on-year. It is estimated that the value of Bitcoin will continue to rise in the next two weeks, because on May 12, the "halving" will occur - a four-year event, in which the rewards for Bitcoin miners are cut in half, meaning the new currency production rate will fall by 50%. In the upcoming Halving the prize for mining each block will drop from 12.5 Bitcoin to 6.25. 

In the year following the first Halving, held in November 2012, the coin recorded a 1,000% jump and traded at $ 1,000. The second cycle was in July 2016 when the price went up before the event. About a year and a half later, in December 2017, Bitcoin recorded its peak value to date - $ 19,891 per unit.