Tim Seymour: Higher yields and hawkish central banks add headwinds to momentum trades

ALSO WARNS THAT ANY BOUNCE HERE COULD WEIGH ON THE DARLINGS OF THE RECENT ROTATION. AND THAT'S PLAYING OUT TODAY WITH TECH AND DISCRETIONARY LEADING WHILE STAPLES AND HEALTH CARE SLIDE. JOINING ME NOW TO TALK AND EXPLAIN AND WORK THROUGH ALL OF THIS IS TIM SEYMOUR. HE'S CIO OF SEYMOUR ASSET MANAGEMENT AND A CNBC CONTRIBUTOR. TIM THE MOST INTERESTING THING TO ME HAS BEEN THE VIOLENCE OF THE CORRECTION THAT WENT BASICALLY UNNOTICED IN THE BROADER WORLD NEWS MARKET AND ECONOMY. UNLESS YOU WERE A KOREAN DAY TRADER. >> YEAH. AND I AND I ALMOST FEEL THAT, YOU KNOW, KOREA IS OUT THERE SAYING, I STARTED THIS, I NEED TO END IT. AND SO WE HAVE SOME ROOM TO GO STILL ON THE KOSPI TO GET BACK TO, I WOULD SAY THERE'S PROBABLY 15% MORE. BUT BUT THIS OVERSHOOT IN MOMENTUM ON THE WAY UP AND MAYBE IT'S AN OVERSHOOT ON THE WAY DOWN. AND, YOU KNOW, WELL NOTED BY BTIG. IT'S A THOUGHTFUL PIECE. MOMENTUM IS A YOU KNOW I THINK NOW AT THREE YEAR LOWS AND BOTTOMED IN WHERE WE BOUNCED TODAY ON THE SMH. THIS IS WHERE WE, YOU KNOW, ESSENTIALLY BOTTOMED BACK IN MARCH. IT WAS AN IMPORTANT LEVEL FROM WHICH WE WENT ON AN HISTORIC RUN. AND IF YOU LOOK AT THE KOSPI, I THINK IT WAS A SOMEWHERE ABOUT A 50% MOVE IN 74 DAYS. AND WE'VE NOW PULLED BACK, YOU KNOW, HALF OF THAT AND LESS THAN HALF THE TIME, ACTUALLY MORE THAN HALF OF THAT. SO, YOU KNOW, ULTIMATELY, I THINK THERE ARE A NUMBER OF CROSSCURRENTS. I THINK THE FED HAS A LOT TO DO WITH A BIT MORE OF THE CRASH YESTERDAY AND A BIT MORE OF THE INDECISION TODAY, AS MUCH OF WALL STREET IS NOT ENTIRELY CLEAR ON WHAT FED WE HAVE HERE. WE'VE GOT A BOJ TONIGHT THAT ALSO PLAYS A ROLE HERE. SO YES FASCINATING TIMES. >> WHAT IS THE. OKAY. LET'S TALK ABOUT THE BOJ FOR A SECOND. I BLAME THEM FOR THE RISE IN GLOBAL BOND YIELDS. I BLAME THE ECB AS WELL WHICH HAS BEEN BUYING PERIPHERAL DEBT. IT'S LIKE THIS HAS BEEN THIS FALSE SUPPRESSION OF LONG TERM BOND YIELDS. THAT IS STARTING TO CORRECT ITSELF. HOW MUCH OF THAT IS PLAYING OUT IN THE U.S. HOW MUCH OF THIS IS WASH'S FAULT? >> WELL, I YOU KNOW, IT'S HARD TO BLAME WASH OTHER THAN WE HAVE A NEW COMMUNICATION REGIME AT THE FED AND PEOPLE DON'T LIKE HOW IT WAS COMMUNICATED YESTERDAY. AND MAYBE THERE'S A QUESTION ABOUT FED INDEPENDENCE. BOJ SEEMS TO HAVE LOOKED PAST INFLATION FOR A LONG TIME. WHAT'S GOING ON WITH DOLLAR YEN TODAY IS FASCINATING. AND IT CERTAINLY COULD UNLOCK A NUMBER OF OTHER TRADES ESPECIALLY THOSE TO ME THAT REVOLVE AROUND A WEAKER DOLLAR. SO COMMODITIES AND A LOT OF YEAH A LOT OF TRADES THAT ARE RELATED TO AT LEAST THE OPPOSITE OF WHAT'S BEEN GOING ON. I'M NOT SURE BOJ IS GOING TO HIKE TONIGHT. THE MARKET IS BEHAVING AS IT IS. THEY'VE ALSO NOT BEEN SHY ABOUT GETTING OUT THERE IN THE MARKET AND DOING SOME OF THE LIFTING THEMSELVES. MAYBE THAT'S HAPPENING TODAY. BUT I THINK THE MARKET IS STRUGGLING WITH THE REALITIES OF THE FUNDAMENTALS. YOU COULD BE A CMT AND THIS IS A THIS IS ABOUT AS EPIC OF A TIME TO BE A MARKET CHARTIST AND A TECHNICIAN. BUT I THINK IT'S IT'S A LOT OF THIS IS BUILT ON FUNDAMENTALS, HIGHER YIELDS AND MORE HAWKISH CENTRAL BANKS AROUND THE WORLD PUT A BIG, BIG HEADWIND ON MOMENTUM TRADES. >> OKAY. THAT SAID, YOU KNOW, IF WE GO BACK TO THE 30,000 FOOT VIEW HERE, WE HAD TO SOME EXTENT, ALMOST A 50% DRAWDOWN IN SOME OF THESE AREAS. AND THE EQUAL WEIGHT S&P IS AT ALL TIME HIGHS. AGAIN, THIS HAS BEEN IT'S LIKE A BEAUTIFUL EXAMPLE. THIS IS NOT 1999 RIGHT NOW AT LEAST. >> NO IT'S NOT. AND I WOULD SAY AFTER ALMOST 9% OF OUTPERFORMANCE ON THE EQUAL WEIGHTED THE RSP, WHATEVER YOU'RE TRADING TO THE S&P FROM ESSENTIALLY, AGAIN, THOSE MARCH LOWS, YOU'RE RIGHT UP AGAINST A RESISTANCE LEVEL. SO IF I'M IF I'M SOMEONE THAT'S FOLLOWING CHARTS. YEAH. IT MAKES A LOT OF SENSE THAT YOU WOULD BE FADING THAT TRADE TODAY. I THINK THE FUNDAMENTALS AROUND MARKET BROADENING ARE BUILT ON FUNDAMENTALS. I THINK THEY'RE BUILT ON MARGIN GROWTH AND EPS GROWTH. THAT'S ALIVE AND WELL. TODAY'S GDP NUMBER WAS A LITTLE BIT WEAKER THAN PEOPLE EXPECTED. A LOT OF INFLATION PULLING BACK SOME OF THOSE NUMBERS TOO. BUT ULTIMATELY I THINK WE HAVE A BROADER ECONOMY, A MORE EQUAL WEIGHTED MARKET. AND I THINK THAT WILL CONTINUE. >> IN 10S. WHAT'S THE PLAYBOOK NOW GIVEN EVERYTHING THAT'S HAPPENED? >> WELL, I THINK OVERSOLD TRADES ARE ONES THAT ARE KIND OF INTERESTING HERE. I THINK YOU CAN PROBABLY PLAY SEMIS TO TO GET BACK ANOTHER 10%. AND THAT'S FOR TRA