The 'Historical Unicorn Event' Investors Should Be Concerned With

Investors don't appear to care that Deutsche Bank strategists think global stocks are not only at an "elevated" valuation, but "possibly the most elevated in aggregate through history."

As most major stock indices continue trading near their all-time highs, Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, agrees that strategists and investors need to reassess their thinking.

Stocks and bonds are currently trading at a "gross overvaluation" and this is a major concern, Schlossberg said during a recent CNBC "Trading Nation" segment. Throughout history, it is common to find instances when either stocks or bonds are overvalued — but rarely, if ever, are both overvalued at the same time.

"It's almost like a historical unicorn event," he said.

It shouldn't be up for debate that this unusual situation is a direct result of quantitative easing by central banks across the world, Schlossberg said. For instance, when the Federal Reserve "opened its pocketbook" and started buying bonds, it resulted in a huge demand for bonds as a whole, which then spilled over into stocks because of easing monetary conditions.

"It seems almost inevitable that the tightening of monetary conditions and an unwinding of demand for all of these financial assets is going to create some sort of a sell-off in one or both markets," he said. "And that's why volatility, which has been tepid, could begin to rise as we move into the end of the year."

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