Markets may be a little “fatigued,” but there are no major warning signs that the rally will end anytime soon, strategist Tom Lee told CNBC on Thursday.

“There are some divergences. I think the leadership really has been increasingly from a handful of stocks,” said Lee, managing partner and head of research at Fundstrat Global Advisors.

“But underlying fundamentals have been good, so I’d say for most investors it’s not necessarily a warning sign,” Lee told “Squawk Box.”

Lee added that it appears valuations are making markets “nervous,” but “for the most part, as long as inflation remains tame, I think this all holds together. I think inflation is the big scare.”

U.S. stock futures were lower on Thursday, as investors awaited details on the Senate’s version of a tax reform bill. House Republicans unveiled a bill last week. There is some worry the Senate’s version could delay certain measures, including a corporate tax cut.

Last month, Lee told CNBC that President Donald Trump‘s proposed tax cuts have been positive for stocks. Lee, who had been bearish several months ago after years as one of Wall Street’s biggest bulls, returned to the optimist camp when he raised his price target for the S&P 500.

Leuthold Group Chief Investment Officer Doug Ramsey told “Squawk Box” on Thursday that with tax cuts “you take it when you can get it,” but added there should be more focus on the deficit.

The nonpartisan Congressional Budget Office says the GOP bill would increase the federal budget deficit by $1.7 trillion over 10 years.

“The interesting thing that no one is remarking on is here we are with a deficit that 3.4 percent of GDP with unemployment at 4.1,” Ramsey said. “The idea of putting a little more fiscal fuel on the fire at a time like this when rates are only a point off their lows is interesting.”