We’ve entered the third phase of Real Vision CEO Raoul Pal’s coronavirus crisis framework, or the insolvency phase, Ed Harrison said during today’s Daily Briefing.

Harrison called J. Crew, which filed for bankruptcy today along with Gold’s Gym, a canary in the coal mine and said that we are unlikely to see bailouts starting to happen until the financial ruin begins to reach companies that were fairly well positioned before the crisis.

Since the Fed can’t save everyone, the fate of many struggling companies will come down to whether creditors are willing to work out a deal, he said, noting that Norwegian Air managed to stave off bankruptcy with a debt for equity swap.

Harrison is looking at what’s happening in Sweden to inform his thinking about how a post-lockdown economy may play out in the US and said that the outlook isn’t promising.

The travel, hotel, and restaurant sectors are taking a massive hit and bankruptcies have been rolling in, particularly in Stockholm, which is seeing six times the number of bankruptcies it had last year. Harrison called this the beginning of mass wave of bankruptcies and said we can likely expect the same to happen in the rest of Europe and the US.

With Sweden as the model for a new normal, Harrison expects an L- or W-shaped recovery and said there’s going to be apprehension and a lot of downside risk on the economic front for the US.