Lawrence McDonald, author of "A Colossal Failure of Common Sense" and "How to Listen When Markets Speak." The recent stock market rally and the surprisingly resilient U.S. economy are reliant on an uneasy balancing act between the U.S. Treasury market, the oil market and struggling regional banks, according to one bestselling author and market risk expert. Larry McDonald, author of "A Colossal Failure of Common Sense" about the downfall of Lehman Brothers, told CNBC that another spike in inflation could have major repercussions through the U.S. economy. Many regional banks have a high amount of long-term bonds and loans on their books that will go down in value if yields rise. McDonald's warning, and his new book, "How to Listen When Markets Speak," come with the stock market hovering just under record highs and the Dow Jones Industrial Average flirting with the 40,000 level.

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Persons: Lawrence McDonald, Larry McDonald, Lehman, McDonald Organizations: U.S . Treasury, Lehman Brothers, CNBC, Dow Jones Locations: U.S