Jim Paulsen sees record 2,200 for S&P—here's why

Stocks should make new highs soon, closely followed strategist Jim Paulsen said Wednesday.

He's the second market watcher this week to tell CNBC's "Squawk Box" to expect a record run.

Paulsen, chief investment strategist at Wells Capital Management, sees the S&P 500 going to the 2,200 level, an advance of 4.75 percent from Tuesday's close, which saw the index break 2,100 for the first time since December.

The S&P on Tuesday was also less than 1.5 percent from last May's record 2,130.82 close.

Ebbing deflation fears, prospects for better earnings later this year and improving world economies are all reasons to believe U.S. stocks should climb, he said.

In the lead up to Easter last month, Paulsen said stocks were in a "bunny market."

"Unlike an enthusiastic bull or a scary bear, a bunny market hops about a bit but really doesn't go anywhere," Paulsen said at the time in a report clients.

Paulsen clarified his "bunny" comments Wednesday, telling CNBC he sees the "bunny jumping" to 2,220 on the S&P and then a pullback if the Federal Reserve hikes interest rates again.

Central bankers raised rates for the first time in more than nine years in December and have said they expect two rate hikes this year.

"The thing you got to do with the bunny market is play a little market timing. Get a little more risk-on. And then if it bounces, get a little more risk-off. There's not enough return to buy and hold," Paulsen said.

On Tuesday, another market analyst, Bespoke Investment Group co-founder Paul Hickey, told "Squawk Box" a perfect storm of bullish stock market trends should push the S&P 500 into record territory soon.

Hickey said catalysts for a rally included hopes for improving earnings, the recent surge in depressed oil prices and the Fed cutting its projections for possible rate hikes this year from four to two.

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