A 2024 election victory for ex-President Donald Trump could unleash a new wave of deregulation, according to Goldman Sachs.

This would help companies in industries subject to strict rules and regulatory oversight, the firm’s analysts, Ronnie Walker and Alec Phillips, explained in a research note. Those sectors include energy (oil and gas), utilities, financials, healthcare, industrials, materials, and telecom. Conversely, consumer discretionary, consumer staples, technology, and real estate have less exposure.

Recall Trump’s recently proposed deal with leading oil and gas companies, where he offered to roll back environmental regulations in return for $1 billion in campaign contributions.

It’s worth noting, however, that the Biden administration presided over a record boom in oil and gas. Politico reports that Biden’s Interior Department, which oversees the federal oil program, outpaced Trump in approving new drilling permits.

But according to the Wall Street investment bank, “equity market sectors that might benefit from an easier regulatory environment generally saw relative strength alongside the changing presidential probabilities.”

ETFs To Watch

• SPDR Oil & Gas Exploration And Production (NYSE:XOP)
• iShares U.S. Aerospace And Defense ETF (NYSE:ITA)
• SPDR S&P Regional Banking ETF (NYSE:KRE)
• Invesco S&P Smallcap Industrials ETF (NYSE:PSCI)
• SPDR S&P Telecom ETF (NYSE:XTL)
• Utilities Select Sector SPDR Fund (NYSE:XLU)
• Health Care Select Sector SPDR Fund (NYSE:XLV)

Focus Areas For Deregulation

During Trump’s previous administration, significant deregulatory actions targeted environmental and energy regulations, including lowering fuel efficiency standards and reducing environmental permitting requirements.

Energy companies even criticized Trump who, in 2020, rolled back rules meant to reduce climate-warming methane emissions — far more potent than carbon dioxide. Shell, BP and the Exxon Mobil Corp disapproved of his decision.

Biden reinstated the methane emissions standards the following year.

Should Trump win in November, he will likely roll back the Biden-era methane emission rules, Goldman’s analysts said.

Another apparent change, the firm notes, would likely be the resumption of LNG export permit approvals, which were paused under Biden.

Goldman Sachs expects a Trump administration to expand LNG exports, and reverse restrictions on greenhouse gas emissions. Additionally, there would likely be an expansion of oil leases on federal land and offshore energy development, and eased regulations on refineries.

In the utilities sector, a Trump administration would likely seek to modify recently finalized rules restricting CO2, mercury, and other pollutants from fossil-fuel-fired power generation.

Regarding auto emissions, the administration would probably aim to relax limits set by the Biden administration, which automakers might meet by increasing the proportion of electric vehicles sold. Goldman Sachs also anticipates a tightening of domestic content requirements for electric vehicle subsidies and loosened criteria for energy credits to make it easier for less climate-friendly energy sources to qualify.

While antitrust enforcement officials in a potential Trump administration might continue pursuing some cases in the internet/tech sector, merger enforcement could ease compared to the current regime.

Financial Regulations

Financial regulation might also shift, with more rapid changes in consumer finance and more gradual adjustments in capital and liquidity requirements.

A key area for potential changes is the "Basel III Endgame," which would raise capital requirements for large banks. However, the Federal Reserve and the Federal Deposit Insurance Corporation are independent of the White House, and their leadership terms do not automatically turn over with a new administration.

For instance, Fed Vice Chair for Supervision Michael Barr's term runs through July 2026, and Chair Powell's term runs through May 2026, complicating the outlook and timing.

In contrast, leadership of the Consumer Financial Protection Bureau (CFPB) would likely change quickly under a Trump administration, benefiting consumer finance stocks.

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