The Federal Reserve is expected to cut rates in 2024. The big question is: When in 2024? J.P. Morgan Asset Management Global Market Strategist Jack Manley doesn't think it's going to as early as some investors expect and that "volatility is the name of the game." Manley thinks that in 2024 there will be room for "opening up the opportunity set a little bit and remembering there are 490+ names in the S&P 500 that haven't done a whole lot of anything," referencing the outperformance of the Magnificent Seven tech stocks. Manley says volatility will create a "ripe environment" for active management. Watch the video above to hear how Manley suggests playing the markets next year.

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Video Transcript

SEANA SMITH: So then Jack, what does that mean then for the equity markets, at least in the first half of the year, if the market's a little bit too optimistic in terms of maybe the fact that they do think the Fed will likely cut rates? Does that mean that we should expect more volatility in the first couple of months?

JACK MANLEY: Volatility is the name of the game. If you think about what has been happening to markets so far this year, it has been driven overwhelmingly by a very small handful of names, right? We spent a lot of time talking about the Magnificent Seven.

And a lot of that, of course, has to do with what's going on with AI. A lot of it having to do with these sort of somewhat miraculous seeming weight loss drugs. These GLPs, right?

But a lot of it also has to do with this assumption that the Fed is going to start cutting. It's going to start cutting soon. And it's going to start cutting aggressively. And so, I think there is room for some of that outperformance recently to unwind.

But the story that we have been sort of pounding the table on over the last several months has been opening up the opportunity set a little bit, and remembering that there are another 490-plus names in the S&P 500 that haven't done a whole lot of anything. So volatility, certainly in 2024. But I think a really ripe environment for good active management across style boxes, across sectors, finding those names that are reasonably valued that are punching above their weight class from an earnings contribution.

BRAD SMITH: And so, I think that's what our viewers are wondering too, right? At the end of the day, how can they still make sure that they're seeing a return on investment positively, even in volatility. What is the top strategy that you would be employing next year?