Deutsche Bank doesn’t expect a double-dip recession in the US, but the German bank does foresee a “proliferation of pullbacks” as the economy levels off following its earlier recovery, said Benjamin Pace, US chief investment officer for Deutsche Bank Private Wealth Management.

“Financially-induced recessions are usually accompanied by weaker recoveries,” Pace said, speaking yesterday morning at a press briefing in New York.

“All eyes are on Europe,” he said, noting the “weaknesses that will continue in the southern tier.”

Around the world, wealth management strategists have been trying to work out the risk that the world economy will slide into recession; there are concerns that as governments like that of the UK seek to slash heavy debt, the spending cuts will cut into growth and jobs.

But the risk, while not negligible, was discounted by Deutsche Bank’s Pace.

Emerging market economies remain a bright spot and “continue to be strong,” Pace said, despite a “bubble in property prices” in China. He expressed confidence that local authorities would be able to slow down “overheating” economies.

Pace cited South Korea, Indonesia, Malaysia and Mexico as examples of strong emerging economies and said Hungary and Poland, despite nagging debt problems, were also “reasonably strong” economies.

Deflation is the “biggest concern” to the global economy, Pace said, while inflationary implications to fiscal and monetary policies have not yet surfaced.

He also expressed concern that pending financial reform legislation in the US, while not as “Draconian” as expected, will curb lending and slow monetary creation.

Small issuers of municipal bonds  were the major concern  of Gary Pollack, head of fixed-income trading and research for Deutsche Bank Private Wealth Management.

Small municipalities which are losing jobs, population and a tax base have become a “real problem,” Pollack said.

“Investors in municipal markets have to do their homework and research who they are buying bonds from,” he said. “They just can’t buy blindly anymore and they can’t rely on ratings.”

On the state level, Illinois “has replaced California as an example of municipal malpractice,” Pollack said, adding that the state’s ability to fund its pension liability in the future is now being questioned.

Both public and private debt were cited as primary reasons why equities have been trading at a discount  with no multiple expansion, despite historically low interest rates, according to Owen Fitzpatrick, head of the equity strategy group for Deutsche Bank Private Wealth Management.

“Public and private debt needs to be solved to get multiples back,” Fitzpatrick said.