Investor Peter Boockvar sees two narratives gripping the market, and one could send investors running for cover.
While the stock market is suggesting an economic and earnings slowdown is temporary, the Bleakley Advisory Group chief investment officer believes bond trading activity signals equities are vulnerable to a painful shock.
"The stock market is assuming ... things will improve in Q2 and throughout the second half," he said Tuesday on CNBC's "Futures Now." "The bond market is taking a more less optimistic take on that, and saying that the data is weak, and we're going to reflect that right now in lower yields and inversions within the yield curve."
So which take is correct?
"The bond market is going to be right," said Boockvar. "We're in a slowdown that is not just temporary, and I think that's something that's going to last throughout the year."
Boockvar, one of the most vocal bears on Wall Street, is concerned there's too much optimism surrounding stocks and the 2019 rally is on borrowed time. The S&P 500 has surged more than 22% from its December low. The index is now just 2% from all-time highs.
"I promise everyone that 70% of companies will beat [earnings] estimates because that's always the case. But that's not necessarily good. It's just normal," he said. "I'm waiting to see the extent of those beats, and I think it's more likely than not that we're going to see a decline."
Boockvar is also questioning what guidance could look like since 40% of S&P earnings are sourced overseas, where a more powerful slowdown is gripping economies.
Despite his bearish forecast, Boockvar acknowledges he's still long stocks. However, he's taking a more defensive approach.
"I have a bigger cash position of about 20%, north of 10% in gold and silver,' Boockvar said. "A lot of the stocks that I own are more value oriented. That's obviously has not been that helpful when everyone rushes to growth, but it's a way for me to get somewhat defensive."