The chief economic adviser for financial services firm Allianz warned that the new coronavirus variant Omicron could shake up the markets, exacerbate supply chain woes, amplify record-high inflation pressures — and possibly result in 1970s-style “stagflation.”

Economist Mohamed El-Erian was asked by “Fox News Sunday” host Trace Gallagher about the Dow tumbling 900 points on Friday over fears of the new variant and market uncertainty over the possibility of more lockdowns and travel bans.

“Yes. So – and it’s happening the world. The marketplace is worried about two things: one, that yet another variant of COVID is going to hit them hard. We travel less. We go out to restaurants less, and we may have additional restrictions that are imposed on us. That’s issue number one,” he said.

“And issue number two, the marketplace is worried also that this will cause more inflation, that the supply chain will be disrupted even more,” El-Erian said. “Those two things together: lower growth, high inflation are stagflation, and that’s what the market is worried about right now.”