Wall Street is depending on strong consumer spending to help keep stocks afloat.
But Gluskin Sheff's David Rosenberg warns the U.S. consumer is in a danger zone, suggesting a bubble is lurking.
"What no one seems to talk about is the underlying fundamentals behind the consumer are actually deteriorating before our very eyes," the firm's chief economist and strategist said Tuesday on CNBC's "Futures Now."
Yet the latest economic data suggests the consumer, considered the main driver of the U.S. economy, is on solid ground. Commerce Department figures show retail sales in July rose 0.7%, after a 0.3% increase in June.
In a recent note, Rosenberg criticized the government's retail report. He estimated the bullish retail sales number was completely financed by credit and, therefore, unsustainable.
"The pundits on bubblevision seem to make their living staring at the hood instead of checking out the engine ... which is sputtering from a real income perspective," he wrote. "Spending in the consumer space will converge in due time, don't doubt that for a second."
According to Rosenberg, the problems lie in the Bureau of Labor Statistics' real average weekly earnings decline in July of 0.3% from June.
"It's actually been flat to down now in six of the past eight months," said Rosenberg. "I'm actually wondering how long the consumer is actually going to keep it up and hold the glue together for the economy when real incomes are starting to subside as much as they are."
Rosenberg, who is has been known as a permabear on Wall Street for decades, came into 2019 saying the U.S. economy is on a collision course with a recession.
As of Tuesday's close, the S&P 500 is up around 16% this year. Since hitting an all-time high on July 26, the index is off about 4 percent due to jitters surrounding the U.S.-China trade war's impact on the economy, a potential global growth slowdown contagion and concern over the 10-year Treasury yield falling below the 2-year rate.
Rosenberg, who calls this the "most bizarre" stock market trading he's ever witnessed, avoided getting into specifics when asked about the size of the next pullback.
"I'll only say that if you have to be in the stock market without getting into what my forecast would be on the levels, is to be defensively positioned," Rosenberg said.