So much for the dog days of summer! The penultimate week of August started with U.S. Treasury Secretary Scott Bessent’s so-far forlorn attempt to suppress long-term bond yields, which rattled traders.

News of a fresh trade war with Canada and a sharply negative reaction to Walmart’s earnings is adding to the noise, according to Julian Emanuel, strategist at Evercore ISI.

In a note published over the weekend, he said the new week is also replete with market-moving factors, including Bessent’s plan for an “economic D-Day” for Iran, Nvidia’s fiscal second-quarter earnings and guidance on Wednesday, and Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole on Friday.

“A lot of things could happen – and with 10-year yields near the very sensitive 4.75% level, the one thing this week won’t be is silent or boring,” Emanuel said.

It is a sensitive time for stocks. Emanuel described the Nasdaq 100 — the big tech-heavy index — as the market’s “sore spot,” having moved from bull-market leader to current laggard.

It’s being weighed down by reverberations from a shift among hyperscalers to negative free cash flow, which is causing information technology credit spreads — a gauge of perceived risk, in the chart below — to widen.

Emanuel said the coming sessions could affect the market in two main ways.

His base case was still that the Fed chair’s challenges on inflation and bond yields, the upcoming midterm elections and the end of earnings-season catalysts will prolong the near-term choppiness. This will be accentuated by small-cap stocks’ particular sensitivity to moves in bond yields as well as Nasdaq 100 weakness.

However, it’s possible that the “bondfire” subsides under the direction of Bessent and Warsh, Emanuel said. More realistically, a positive share-price reaction to Nvidia earnings reinforces investors’ faith in the robustness of the artificial-intelligence trade.

Under those latter conditions, investors’ fear of missing out “could begin early,” he said, which would result in both rising stocks and rising bond yields — which ended both the dot-com bubble and Japan’s 1989 bull market.

He said that short-term investors should consider buying put options on the iShares Russell 2000 exchange-traded fund of small-cap stocks. Put options give the buyer the right to sell the ETF at a particular price within a given time period, a negative bet, and Emanuel suggested buying the November 275 puts.

In the medium term, Emanuel expressed more optimism about technology, favoring call options on the Invesco QQQ Trust Series I, a proxy for the Nasdaq 100. Emanuel suggested buying March 850 calls.

Those QQQ calls will exploit the “runaway upside we expect before the ‘Checkered Flag’ is waved to end the ‘AI Revolution’ Bull Market race,” Emanuel said.

And for those who don’t trade options, and who have what Emanuel called “an AI-tilted portfolio,” some stocks with negative beta could be added so that “you and your portfolio will sleep better at night.”

Negative beta stocks are those that tend to move in the opposite direction to the overall market. Emanuel has previously suggested including ExxonMobil, Johnson & Johnson, AbbVie, Costco Wholesale, Coca-Cola, Philip Morris, T-Mobile, McDonald’s, Lockheed Martin and Progressive Corporation.