Capstone believes clean fuel margins will expand, driven by the likely release of 45Z proposed rules and the finalization of the 2026-27 Renewable Fuel Standard (RFS). We expect incentives from state-level programs to benefit credit prices, starting with the January 31st release of market performance data under the new California Low Carbon Fuel Standard (LCFS). Clean jet fuel will gain momentum in states amid federal uncertainty.

Capstone believes the approach of the midterm elections will dampen appetite for aggressive policy action across both compliance and voluntary carbon markets in 2026. California allowance prices should find support from Cap-and-Invest rulemaking despite federal legal challenges, while energy affordability concerns are likely to push states toward less stringent Renewable Portfolio Standards, weighing on compliance Renewable Energy Certificate (REC) prices.

Capstone expects Europe’s energy transition agenda in 2026 to be shaped by tighter grid capacity, mounting fiscal constraints, and increasingly complex regulatory trade-offs. As the EU seeks to balance climate leadership with industrial competitiveness—against a backdrop of US protectionism and low-cost Chinese cleantech exports—we expect priorities to shift away from headline renewable build-out toward assets with secure grid access, system flexibility, and strong regulatory alignment.

Capstone believes the Trump administration is intent on dismantling the Consumer Financial Protection Bureau (CFPB), even as the agency—constrained by limited budgets and staffing—moves forward with a broad deregulatory rulemaking agenda favorable to industry. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to step in, creating a fragmented and uneven regulatory landscape.

Capstone believes the National Association of Insurance Commissioners (NAIC) will continue its multi-year effort to tighten its scrutiny of the investment strategies of insurers, and of their use of artificial intelligence (AI) and big data. We expect state policymakers to continue weighing targeted reforms to promote insurance affordability as heightened catastrophe risks shape the nation’s largest property and casualty (P&C) markets.

Capstone expects a mixed outlook for K–12 vendors, universities, and higher education services in 2026. While federal education funding is likely to remain stable despite disruptions at the US Department of Education, state-level budget pressures threaten K–12 vendor revenues. Policies targeting international student enrollment create headwinds for universities and related service providers, while changes to graduate loan limits open opportunities for private student loan lenders.

Capstone expects Medicaid-exposed providers to face incremental, rather than severe, headwinds in 2026. While rate growth is likely to remain constrained, we see broad reimbursement cuts as unlikely given relatively strong state budget conditions and political pressure to protect providers serving vulnerable populations. However, as the Centers for Medicare & Medicaid Services (CMS) Medicare market basket growth slows, providers may remain exposed to ongoing inflationary pressures.

Capstone expects healthcare information technology opportunities in 2026 to be shaped by three converging pressures: litigation, regulatory deadlines, and legislation. Information blocking enforcement and lawsuits should favor analytics vendors, Fast Healthcare Interoperability Resources (FHIR) application programming interface (API) mandates are driving procurement of interoperability solutions, and Medicaid work requirements are creating tailwinds for Eligibility and Enrollment and revenue cycle management (RCM) vendors.

Capstone believes new investment in defense and homeland security-focused capabilities will accelerate in 2026 as Washington restores focus on the Western Hemisphere in what it is calling the Trump Corollary to the Monroe Doctrine. The perception of a US retrenchment also is driving Europe to reinvest in its own capabilities, leading to what we believe will be a 60% increase in defense spending in major European markets by 2030.

Capstone expects regulators to take an increasingly multifaceted approach to curbing harmful activity on platforms operated by Alphabet Inc.’s Google, Meta Platforms Inc., Apple Inc., and Roblox Corp. Age verification requirements, children’s safety litigation, and evolving content liability standards create near-term headwinds, though First Amendment considerations may limit their reach. We also expect antitrust actions—particularly targeting app store practices—to continue.

Capstone believes the Trump administration’s policy of accelerating deportations will pose an underappreciated threat to US homebuilders, one-quarter of whose labor supply is immigrants. We expect the courts to block the administration’s proposed $100,000 price tag for H-1B visas, and that prevailing wage reform will spark higher labor costs, another underappreciated headwind, this time for foreign IT outsourcers.

Capstone expects the Republican-led Federal Communications Commission (FCC) to continue rolling back regulations and take a more welcoming approach to mergers in 2026. The agency is also likely to use its broad authority over what qualifies as “in the public interest” to push companies for certain concessions during reviews. Overall, we anticipate a surge in consolidation across both broadcast media and the broadband industry through 2027.

Capstone expects US agriculture to face a difficult 2026 as farmers grapple with weak crop prices, elevated input costs, and persistent trade uncertainty. The Trump administration’s push to narrow Supplemental Nutrition Assistance Program (SNAP) eligibility—including new work requirements—introduces fresh risks for major grocers and packaged-food companies. With limited federal relief expected, producers and food retailers should prepare for tighter margins, uneven demand, and policy headwinds that will shape the sector’s performance in the year ahead.