Global markets on a moving chessboard as sentiment overtakes fundamentals: Seth R Freeman

Today’s global macro environment resembles a constantly shifting chessboard, where geopolitics, policy uncertainty and investor sentiment intersect in unpredictable ways. Speaking to ET Now, Seth R Freeman of GlassRatner Advisory provided an assessment of how markets are dealing with the renewed volatility resulting largely from developments in the United States and the broader realignment of the global order.Freeman described the current phase as one characterized by persistent uncertainty. “Well, it’s a moving chessboard, especially given the continued chaos that Donald Trump is causing – not just in terms of markets, but potentially in terms of the changing world order. And the biggest concern I have is whether this will be permanent, or whether things will return to what we used to consider normal,” he said.

As to whether that normality could return, Freeman urged caution. “It’s a bit early. We need to see a bit more cohesion within the opposition party, you could say,” he noted.According to Freeman, Trump’s influence is unlikely to disappear anytime soon. “Yes, it is definitely not slowing down,” he said, adding that the real risk is not in whether the systems continue to function, but in how sentiment changes. “Even as the world functions, sentiment – ​​both on the investor and consumer side – can change. In the United States, many consumers are defaulting on their credit cards, the used car market is seeing a huge amount of defaults, impacting banks that focus on subprime lending, and the consumer market can be fickle. That’s where the real risk lies.”

While US markets have largely absorbed the shocks so far, Freeman warned that proposed policy changes could have unintended consequences. On plans to cap interest rates on credit cards at 10%, he said: “This will hurt consumers. It will be difficult for the banks, but the reaction of the banks, if their interest rates are capped at 10%, is that they are simply not going to issue credit cards. There is a large part of the US consumer market that really needs credit, and banks and credit card issuers usually factor in a significant loss factor. Ten percent will make it completely unprofitable.”

Looking ahead to the midterm elections and the policy focus on domestic consumption, Freeman believes volatility will continue. “It just creates a volatile sentiment situation,” he said, highlighting how quickly institutional capital can move. “There is a real risk that some people in Manhattan will wake up in the morning and the risk committee is going to say, ‘We have to do

Against this backdrop, emerging markets – and India in particular – will benefit. “If you look at what happened in the fourth quarter, the flows into emerging markets and India were incredible,” Freeman said. “The returns for people in emerging markets have finally been well rewarded. I actually think, in terms of relative growth rates, you will see more money flowing into emerging markets, which is positive for India. There is a lot of investing in baskets and indexes, and to the extent that India is included in certain funds, this will benefit.” In global markets, Freeman expects vigilance rather than panic in the short term. “I don’t think we’re going to see anything dramatic, but CEOs and fund managers will really be watching closely,” he said, noting that the appointment of a new Federal Reserve chairman under the Trump administration will be closely watched. “Balancing Trump’s appointment with the Fed’s historic independence will be a very tough job.”

Answering why foreign institutional investors’ assets in India are at a decade low despite strong domestic flows, Freeman pointed to relative returns and currency risk. “It is very risky for US investors to invest in the Indian market when the rupee takes a hit because you could get a double whammy: the devaluation of the rupee and a decline in the market,” he explains. He added that while public market flows may appear weak, significant foreign capital has entered India through private equity channels.

On the Union Budget, Freeman warned of policy surprises. “If something like a sudden announcement of capital gains tax happens, it would be damaging. But I think the government has learned a lot of lessons from that experience,” he said, adding that any relaxation of investment-related provisions would help restore confidence, especially for long-term infrastructure capital.

Finally, Freeman struck a measured tone on China’s role in the evolving global alliance. “The Trump administration hasn’t focused as much on China lately,” he said. While tariffs have had less of an impact on American consumers than expected, he doesn’t expect China to dominate the story as it once did.

As global investors recalibrate amid policy uncertainty, shifting alliances and fragile sentiments, Freeman’s message is clear: growth differentials and stability will drive capital, and in that equation, emerging markets like India continue to hold an important place on the global chessboard.