Deregulation is a primary, undervalued catalyst for corporate earnings growth, margin expansion, and stock market outperformance.
The S&P 500 is no longer a source of broad market diversification and should be viewed as a concentrated thematic fund focused on Artificial Intelligence.
The U.S. economy's outperformance relative to Europe is significantly attributable to a less burdensome regulatory environment, not just its technology sector leadership.
The technology and AI sectors, current darlings of the market, are likely to face increased regulatory headwinds in the future.
A systematic, AI-driven analysis of corporate language can effectively identify companies best positioned to benefit from political and regulatory shifts.
Trump Administration
Gayed highlights policy shifts during this period, such as changes to the FedRAMP program benefiting government contractors and an evolution of the stated policy from cutting two regulations for every new one to a more aggressive ten-for-one stance.
FMKT ETF Launch
The Free Markets ETF (FMKT) was launched, with Gayed noting it traded 400,000 shares on its first day, indicating initial market interest in the deregulation theme.
Post-Launch Performance
Gayed claims that at one point following its launch, the FMKT ETF outperformed the S&P 500 by 1,000 basis points, suggesting a period of significant alpha generation for the strategy.
Current Market View
Gayed currently argues that the market is undervaluing the positive impact of potential deregulation on company earnings and that the S&P 500 has become a non-diversified, thematic AI fund.
Forward-Looking Period
Gayed predicts a potential market rerating for deregulation-focused companies towards the end of the year, while also anticipating that the technology and AI sectors will face increased regulatory scrutiny.
▶The Deregulation Investment ThesisJun 2026
Michael Gayed's core strategy is investing in companies and sectors poised to benefit from reduced government oversight. He argues that deregulation accelerates time-to-market, increases corporate margins, and unlocks earnings potential that is currently undervalued by the broader market.
This theme represents a highly directional bet on a specific political and policy environment, making the strategy's success heavily dependent on electoral outcomes and the subsequent legislative agenda.
▶AI-Driven Thematic InvestingJun 2026
Gayed's firm, Tactical Rotation Management, employs a proprietary AI-powered workflow to systematically identify portfolio candidates for the FMKT ETF. This process involves screening earnings transcripts and financial reports for mentions of 'deregulation' and the impact of regulatory costs.
This approach attempts to quantify a qualitative, political concept, transforming a narrative-driven investment idea into a systematic, data-driven portfolio construction process.
▶Market Concentration and Redefinition
Gayed posits that major indices like the S&P 500 have lost their diversification and now function as de facto thematic funds. He specifically characterizes the S&P 500 as a concentrated bet on the Artificial Intelligence sector.
This perspective serves as a justification for alternative thematic ETFs like FMKT, which aim to provide investors with exposure to different, potentially uncorrelated market drivers beyond Big Tech.
▶Regulation as a Factor in Global CompetitivenessJun 2026
Gayed directly links the level of regulation to national economic performance. He asserts that the United States' economic outperformance relative to Europe is significantly driven by its less stringent regulatory environment, not just its dominant technology sector.
This view frames domestic regulatory policy as a key variable in geopolitical and economic competition, suggesting that a country's 'regulatory alpha' can be a source of competitive advantage.