The debt crisis in Greece and the stock market meltdown in China have just been "warmup acts" to the main event for U.S. investors: the Fed.
That's according to closely followed market watcher Jim Paulsen.
The chief investment strategist at Wells Capital Management said Monday he expects central bank policymakers to hike interest rates in September for the first time since 2006.
Paulsen got cautious on U.S. stocks at the end of last year and predicted a sideways 2015, which has come to pass so far, with the Dow Jones industrial average up about 1.5 percent this year based on Friday's close.
But the S&P 500 has returned more than double the Dow, and the broader market index was just about 4 points from a record close ahead of Monday's trading.
The Nasdaq composite has been the big winner this year—up 10 percent based on Friday's close in record territory after the best week since October.
Acknowledging the upswing in stocks, Paulsen said the market could go higher in the short term. "But we may get a full blown correction yet," he warned, pointing out it's been "third-longest period in post-war history without a correction."
He advised investors to look outside the U.S. "Most of the rest of the world is not in the situation of the United States," he said. "They do not need to raise rates, moving towards more hostile policies toward financial markets."
Stock markets in Europe and Japan have underperformed U.S. stocks for the past couple years or so, he argued, saying they're a much better "relative value."