Leon Cooperman and Howard Marks, two of the sharpest investors, on Bloomberg.

In regards to valuations Marks says that most assets are on the high side of fair value. Interest rates are being held at unnaturally low levels which implies that prices are unnaturally high. When the bond market ceases to be manipulated, rates will rise and that means that bonds will decline in price.

Cooperman talked about the equity markets. He said that over the last 50 years the SP500 has had an average p/e ratio of about 15, and when inflation was low (between 1 and 3%) the p/e averaged closer to 17. During the time when the p/e averaged 15 the 10-year government bond averaged about 6.67% and US Treasury Notes averaged 4.4%. Today, the p/e is at about 16. However, we have close to 0% short rates and 10-year government bonds are at about 2.5%.

Cooperman thinks the market is discounting either a rise in interest rates or slower growth. When the first interest rate happens, there will be an adjustment but the market typically rises for about 2-years plus after the first increase.