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.
Meanwhile, long-time stock bull Thomas Lee has not been as concerned about the market.
"Analysts really made big cuts going into this earnings season. But now companies are beating by the biggest margin in several years," the founder of Fundstrat Global Advisors told "Squawk Box" in an earlier appearance.
Companies that earn a significant portion of revenue abroad are contending with currency headwinds because they must preserve market share over margins, he said. A stronger dollar makes U.S. products more expensive overseas and dilutes the value of earnings when American corporations bring profits back home.
But Lee insisted U.S.-focused companies are seeing real savings. The picture will get better as the mix of corporations reporting first-quarter earnings shifts from multinational industrials to domestically focused cyclical companies, he added.
"What we're going to see with the strong dollar is that it's going to [also] strengthen the U.S. consumer, considerably. That's the engine for global growth." Lee also sees an improving housing market as a positive economic driver.