For years, regulation has acted as a drag on the economy. While it’s designed to protect consumers, stabilize markets, and reduce systemic risk, it can also slow innovation, make it more difficult to bring new products to market, and result in millions of dollars of extra expense. That’s why, with three other partners, I’ve brought The Free Markets ETF (FMKT) to market, says Michael Gayed, editor of The Lead-Lag Report.
The good news for investors and the market is that President Trump has put a target on regulation. His pro-business stance has always emphasized improving the operating conditions for corporations to make them more profitable.
The Tax Cuts & Jobs Act of 2017, which included a reduction in the corporate tax rate, helped accelerate earnings growth for corporations and push stock prices higher in its aftermath. The more favorable conditions for businesses directly translated into better portfolio performance for investors.
While the Trump Administration is attempting to push through a second tax cut bill aimed at giving consumers and businesses a boost, it’s another Trump policy that could end up delivering an even bigger catalyst for a stock rally - deregulation.
This, of course, is the process of reducing or eliminating government rules, laws, or oversight in an effort to reduce costs for businesses, increase efficiency, and stimulate innovation and economic growth. In short, deregulation is a path to ease conditions for businesses and potentially make them more profitable.
I strongly believe deregulation will have far-reaching consequences on the economy – and result in new and emerging outperformers that could directly benefit from it. FMKT seeks to target companies and themes that stand to benefit from the deregulation trend – banks and financial institutions, oil and energy companies, and Bitcoin and cryptocurrencies.
