Waiting for Brexit's Other Shoe(s) to Drop

At the height of the U.S. financial crisis in 2008, right after the bankruptcy of Lehman Brothers, everyone was waiting for the proverbial "other shoe to drop."

There was only one problem with that analogy, as money manager Laszlo Birinyi pointed out then: "This is a centipede. We keep waiting for the other shoe to drop and it drops and then there's another shoe and another and another."

So here we are, two trading sessions after British voters dropped a giant shoe that landed with a calamitous thud in financial markets, wondering just how much footwear this particular crisis has on.

A look at many of the stress indicators shows how far financial markets are from a Lehman Brothers or European debt crisis-like crunch. However, the rapid rate at which conditions deteriorated is eye-popping and will require close attention before anyone should feel confident enough to sound the "all clear."

One of the more interesting reactions was that the rates that big banks say they charge one another for loans actually fell sharply on Friday. Three-month Libor rates in U.S. dollars, which had climbed to a seven-year high at the end of May, fell to a three-month low. Pound Libor rates sank to a 15-month low: