Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
Upside of Inequality Oxford Unintended Consequences

AI Summary. Recent moves in stocks, bond yields, the yield curve, and the dollar are small relative to the 15-year run in asset prices and to the scale of underlying shifts underway. The US share of world stock market value went from 50% to almost 75%, and recent underperformance barely undoes a couple of months of that gain.

Karen Karniol-Tambour and Jim Haskel Bridgewater Associates
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Bridgewater’s Karen Karniol-Tambour argues that changes in equity prices and bond yields do not reflect the “magnitude of underlying tectonic shifts that are underway” that imply “all US assets are under exceptional risks” from lower foreign inflows.

Are recent market moves small relative to the past 15 years?

Core argument: Karen Karniol-Tambour notes the US share of world stock markets rose from 50% to almost 75%, against which recent market moves are barely noticeable.

When you then just go and step back and look at these market moves in the context since 2010 or so—since this run we had in the last 15 years in assets—they are very small. The magnitude of what has actually occurred in pricing is very small relative to what I really believe is the magnitude of underlying tectonic shifts that are underway here. If you look at the stock market, the US moved from 50% to almost 75% of world stock markets. What’s happened recently is barely noticeable. The US has been outperforming every single country in the world massively. The last few weeks have felt like dramatic underperformance, but it barely undoes a couple of months of this. The bond yield, the moves feel large because we’re not used to them happening on days like these, but the bond yield’s kind of right in the range it has been for a while. The yield curve slope, it’s certainly sharper than it was—and that was a fast move—but this is not a major risk premium yet. This is not anything like a steep yield curve. And in the currency markets, the run that the dollar has had has just barely started to reverse in the recent moves.

Takeaways by Macro Roundup® AI

  1. Karen Karniol-Tambour notes the US share of world stock markets rose from 50% to almost 75%, against which recent market moves are barely noticeable.
  2. Karniol-Tambour argues the magnitude of recent price moves is very small relative to the underlying tectonic shifts she believes are underway, with the bond yield still within the range it has occupied for a while.
  3. Karniol-Tambour says the yield curve slope is sharper than it was after a fast move but does not yet reflect a major risk premium, and the dollar's run has only barely started to reverse.

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  • The Great European Disentanglement From US Stocks Has Only Just Started — Federal Reserve data show European investors held about $9tn in US stocks, roughly 17% of the total value of the US market. After inflation, a dollar invested in the US at the start of 2000 was worth $3.28 by the end of 2024, versus $1.63 for the rest of the world.
  • Dollar Upheaval: This Time is Different — Standard interest-rate parity implies a 50 basis-point rise in U.S. long-term yields relative to European yields should appreciate the dollar about 5%, yet the dollar depreciated 3.6%, leaving an 8.6% gap. The authors argue investors have reduced their willingness to pay for the safety and liquidity of all dollar-denominated assets, not only U.S. Treasury securities.
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