In our 2026 Outlook: The Policy Engine, we spent considerable time talking about how policy is increasingly a driver of capital markets. The Iran conflict, and the resulting market disjoint, certainly served as another example of how policy, geopolitical or otherwise, should be top of mind when investors consider portfolio construction and risk management.

So, what now? The simple answer is we expect more of the same. Policy again will be front and center as we turn our attention to U.S. midterm elections, and the uncertainty surrounding Kevin Warsh as the new chair of the Federal Reserve (Fed). Mr. Warsh’s ability to influence his colleagues, and questions around congressional balance of power in midterm elections, should be key items that help shape the second half of 2026.

This doesn’t mean we have lost focus on artificial intelligence (AI) and the definitive upside trend we have seen in corporate earnings. That is indeed part of our calculus as well. As a matter of fact, strength in earnings is a key reason we have added to our 2026 return expectations for equities. While some frothiness around AI expectations and market concentration do leave us a bit concerned, the wave of earnings growth we have seen could persist, adding degrees of comfort to our forecast.

To learn more about the opportunities and challenges to be on the lookout for, read the 2026 Midyear Outlook today. 

Access the full report here: Midyear Outlook 2026

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