A flip in the strong-dollar/weak-oil-prices script could force the Federal Reserve to move more aggressively on interest rates than advertised, closely followed market watcher James Paulsen said Wednesday.
"I sort of suspect the dollar is peaking as we speak and crude is bottoming," the chief investment strategist at Wells Capital Management told CNBC's "Squawk Box" in an interview. "You get a weak dollar, a jump in commodities prices, unemployment heads toward 5 percent, wage pressures show up even more ... all at the same time, then boy I think the slow and steady [Fed] exit ... goes out the window."
Under that scenario, Paulsen said, Fed policymakers may have a "panic tightening" on their hands, which would bolster his thesis of a flat, volatile stock market this year. At the end of 2014, he turned cautious, after riding the bull market for years.