Thanks to QE, bubble of 2000 looks like 'day at beach’

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Even as global markets continue to be held hostage over the prospect of the unwinding of the U.S. Federal Reserve's massive monetary stimulus, Hans Olsen, chief investment officer of Americas at Barclays, argues that the tapering has to happen, and the sooner, the better.

His comments come as Fed chief Ben Bernanke delivered his semi-annual testimony to a U.S. Congressional panel Wednesday. He said the central bank is prepared to begin tapering the $85 billion in bond purchases it makes each month, depending on economic data improving.

However, he said an increase in interest rates is still a long way off.

(Read More: Will Bernanke taper talk rock the markets again?)

"When you think about how much you pay for a dollar's worth of sovereign debt income in the United States or investment grade debt, if you create a PE multiple out of it, that would make the stock market bubble of 2000 look like a day at the beach. It's really quite remarkable," Olsen told CNBC Asia's "Squawk Box" on Wednesday, referring to the dotcom bubble that burst in 2000.

"Let the market start to price things based on fundamentals again rather than money printing. The sooner we get back to a market pricing, the more sustainable it becomes," he added.

(Read More: Why stock markets can trust the Fed)

While Olsen is overweight on U.S. equities, he says the run up in stock prices does not reflect fundamentals either.

"[U.S. stocks] are up close to 17 percent on a 2.5 percent earnings rise – it's hard to make the case that that just can be done on fundamentals alone. It's really money in motion, [if] you push money out of the fixed income complex, where does it go? It goes to the equity market in search of a better yield."

Olsen expected Bernanke's testimony to be a "study in caution" that likely would entail a slow stimulus withdrawal.

(Read More: Will Bernanke surprise markets again this week?)

"The U.S. economy is operating along an envelope that is frustratingly slow relative to our prior history and fast enough for the Fed to be thinking about an end to QE," he said.

(Read More: Fed speak has some expecting QE end in December)

—By CNBC's Ansuya Harjani