Allianz Chief Economic Adviser Mohamed El-Erian gave a gloomy outlook for global markets Thursday, as the Dow Jones industrial average continued its largest two-day slide since March.
"What we're seeing is a classic overshoot that starts in the emerging markets world and it starts spreading," he told CNBC's "Squawk on the Street" in an interview. "What that causes is heightened risk aversion."
El-Erian noted the outflows of funds hits emerging markets the hardest first, with the capacity to send shock waves to other markets "and at the end is the equity market in the U.S."
Invoking emerging markets in the 1990s, El-Erian said he was "having some flashback because that's an asset class that always overshoots because the dedicated investor base is small."