According to the latest figures, 13 American companies (more than 50 million in size) filed for bankruptcy in the week ended June 21. That brings the number of big companies that went bankrupt this year to 117, the same as the record high set in the first half of 2009.

The number of small business bankruptcies is even more staggering, with 722 companies filing for bankruptcy protection in May, up 48% from a year earlier. In May 2019, a total of 487 companies filed for such bankruptcy.

A more worrying thing is that the current valuation of the stock market does not match the recession of the real economy, which actually reflects the market's illusion of economic recovery, which will have an impact on the economy as more companies close down and lose jobs permanently. This could lead to the bursting of the stock market bubble and trigger another wave of unemployment.

At the same time, the data also show that the oil and gas industry, retail and catering are the hardest hit, although oil and gas stocks are still rising recently.

Bloomberg reported on Tuesday that 13 U.S. companies (more than 50 million in size) filed for bankruptcy last week. That brings the number of big companies that went bankrupt this year to 117, the same as the record high set in the first half of 2009.

Figure 1: the number of bankruptcies in the United States has continued to be higher than last year before the outbreak, and now it has exceeded its peak in 2009.

The healthcare sector has also seen a record number of bankruptcies, with 13 companies going bankrupt this year, almost double the number of seven in the same period last year. Ironically, the epidemic crisis has not even had a positive impact on the health care industry.

Some of the big companies in trouble have gone bankrupt-Hertz, J. Crew, J.C. Penney and Neiman Marcus.

The numbers for small businesses are equally bleak.

However, the number of bankruptcies of large enterprises is negligible compared with that of small ones.

Affected by the epidemic, the number of bankruptcies in the United States surged by nearly half in May from a year earlier: according to US court records, 722 companies filed for bankruptcy protection last month, an increase of 48% over the same period last year. In May 2019, a total of 487 companies filed for such bankruptcy.

On June 9th CBS News reported that, as a result of the recent closure, the next wave of recession will be bankruptcy.

Chris Kuehl, an economist at the National Association of Credit Management (National Association of Credit Management), also said: "this is a sign that already weak companies are being affected by the recession triggered by the blockade." Companies that had been struggling before the epidemic were really in trouble. "

What do these bankruptcies mean for the US stock market?

It is worth noting that despite all the bailouts provided by the government and the Federal Reserve, these bankruptcies were finally finalised. Therefore, the stock market should not assume that financial aid will prevent further economic damage.

On the contrary, with the end of the approved bailout plan, one can reasonably expect the bankruptcy rate to rise. The stock market has been unaware of all this, foolishly causing the market capitalization of some bankrupt companies to rise and then fall again.

But what is the logical relationship between the two?

If the market continues to run counter to the commercial economy at this rate, shell companies will soon become trillions of dollars worth of bargaining chips in Wall Street casinos.

If not all, the bankruptcy of companies that partially repay their creditors will eventually turn into bank bankruptcy, and then return to the abyss of 2009.

However, the price of the stock market is rising to reach its previous all-time high (Nasdaq has even surpassed). All this is based on the illusion of a "v-shaped recovery", but the reality is that all these jobs lost as a result of the restructuring of bankrupt companies will not come back.

Bankruptcy does not follow within a month at the time of an epidemic. Bankruptcy liquidation takes time, but many companies do not have enough resources to tide over the difficulties. This means that the bankruptcy caused by the widespread blockade has only just begun.

Those who filed for bankruptcy are mainly consumers and the energy industry.

The oil industry has weathered difficult times in recent years, but bankruptcies have increased every time, and many companies in the industry are now preparing to file for bankruptcy.

It is estimated that there are 75 to 80 large listed oil and gas companies in the United States. Unfortunately, in a year or two, that number is likely to halve, and those remaining companies can only survive through layoffs and asset sales.

This is an industry insiders' dire prediction of the future bankruptcy of large US oil and gas companies.

The oil companies were able to avoid bankruptcy because of the tolerance rules imposed during the government shutdown. However, it is not clear whether gasoline demand will return to levels seen before the end of the tolerance period.

Many companies plan to continue telecommuting, which means less commuting. Most large-scale events involving a lot of traffic will stop in the summer or longer. As a result, the oil majors will have a lot of pain.

However, oil and gas shares have risen 50 per cent since they hit rock bottom in March.

Figure 2: oil and gas stocks are rising despite a surge in bankruptcies and bleak prospects

Oil is not the only industry that feels the pain of the natural gas industry.

The same applies to retail and catering. Many companies that closed during the economic crisis have not reopened since the economy officially recovered. This means that they may be eliminated by the market.

Many reopened restaurants are struggling to survive rules in some states that require a 50% reduction in occupancy to maintain social distance. Some do not even meet their lower occupancy limits because customers are afraid to come back.

The profit margin of the restaurant is so low that if revenue falls by 50% or more, it will not last long.

The stock market is already far ahead of the economy, and the economy seems to have no intention of catching up. Instead, we will continue to see wave after wave of bankruptcies that lead to permanent unemployment as businesses reopen.