A weakening dollar has eased concerns about U.S. companies' overseas performance, but Evercore ISI portfolio strategist Dennis Debusschere warned on Tuesday that bad news can only translate into good news for so long.
The greenback has weakened because central banks have been suppressing volatility and U.S. economic data have been deteriorating, Debusschere said. As a result, economic performance and volatility have diverged, he added.
But over time, the two tend to converge, Debusschere said. That creates a "trap door scenario" in which the bottom could fall out of U.S. markets, he said.
"This idea that bad is good in the sense that it weakens the U.S. dollar on a go-forward basis, is always good until it's not," he told CNBC's "Squawk Box."
So while the weaker dollar has gotten the U.S. economy out of the woods for the time being, stock multiples are now very high relative to their underlying fundamentals, he said. Those valuations have run up in part because volatility is artificially low, according to Debusschere.
"The market is riddled with trap door scenarios as long as that continues," he said.
David Lebovitz, global market strategist at JPMorgan Asset Management, said the divergence between the stock market and underlying fundamentals is concerning.
"We need to see some earnings growth later this year. Otherwise the fundamental thesis for stocks starts to go out the window," he told "Squawk Box" on Tuesday.