More good news for equity bulls from Crispin Odey.

Odey, who called the possible start of the bull market earlier this year, says technically there is "every reason to be hopeful that a major correction will not happen before September".

And, having profited handsomely from his position in Barclays, which is now a 16.3 percent holding in his European fund, he sees the best opportunities in companies that were once unable to refinance but now can get credit, rather than safe-haven stocks.

"I still find myself coming out of meetings with companies whose share price is up fivefold since January and wanting to fill my boots. But it is quite a narrow field.

"This is the year of the prodigal son, with no prizes for being the sensible and good older brother."

(See also Odey's Barclays Boost)

(Follow major developments in the hedge fund industry this week with Hedge Hub's coverage of the GAIM)

As investors in London’s junior AIM market know only too well, high risk does not always mean high return. Now, more than ever, the Alternative Investment Market of the London Stock Exchange needs to prove that it can offer investors high-quality companies.

The FTSE Small Cap index of smaller companies listed on the main London market has outperformed the AIM 100 index on the way down, and on the way back up. The FTSE Small Cap has gained almost 30 percent over the last couple of months, while the AIM 100 has risen 20 percent.

And that’s after the AIM 100 saw falls of over 50 percent in the past year, much more than the 27 percent posted by the FTSE Small Cap index.

While liquid companies like Advanced Medical Solutions and Cape typify the benefits of AIM, there are too many that have cut back so much that they are reduced to a CEO operating alone out of his spare bedroom.

AIM officials said on Friday that they thought the market has had its best month for a year, raising around 500 million pounds for companies, but this includes 220 million pounds raised by one company alone, Max Properties.

Fund managers say that they like some AIM companies that are making profits, or close to that point. However high-risk beta stocks that expect investors to hang around for five years or more should be happy that the winter weather has cleared, because they’re likely to spend most of their time with their caps in their hands.

If AIM wants to see its companies grow fruitfully as cash returns to the market, it will have to start out by sifting the chaff from the wheat.

Trying to second guess reaction to news during this financial crisis has been a fraught exercise and the U.S. Treasury may have a few advisers playing game theory to assess the impact of results from bank stress tests.

The tests are an attempt to determine which banks can survive more trouble, and who can’t. And how big any balance sheet holes might be. The results are due out on May 4.

If the results look too good, the process will look like a whitewash. Too negative, and it will destabilise still-jumpy markets. Yet showing up problems at one or a few banks could hang them out to dry.

The plan may have been to keep results secret, but that’s unrealistic. Shares in Britain’s Barclays soared last month when its regulator gave it an all-clear. That boosted all the UK sector, but then Barclays was almost alone in the spotlight — its rivals had either already been bailed out or had comfortable capital positions.

In the U.S., there are 19 banks to handle. It could be a PR nightmare and maybe one policymakers should have seen coming. Tim Geithner may end up on the back foot, just as he tried to get ahead of the crisis.

Or he may just opt to play hardball with the weaker banks. At least a transparent process will remove uncertainty from the stronger names.

Shampoo, margarine and medicine - surely some things will be okay in a recession?

Unfortunately, the concept of defensive stocks is taking a big knock along with so much else this time round. Companies making the stuff are themselves no longer certain what the future holds.

Unilever’s decision to scrap its financial targets sent its shares skidding this week and raised the spectre that more companies may follow suit.

So far, U.S.-based groups such as Procter & Gamble, Kraft and Sara Lee have trimmed their guidance rather than abandoned it. But some analysts think other consumer goods powerhouses in Europe, where the tradition of giving clear earnings guidance is less well-rooted than in the U.S., might copy Unilever in throwing in the towel.

Nestle, Danone and Reckitt Benckiser all report results in the next two weeks.

At the same time, the world’s second largest drugmaker, GlaxoSmithKline, is also giving up the practice of guiding the market on profits.

Glaxo insists the move is all about focusing management and investor sights on the long-term. But its decision is bound to leave investors uncertain about what the future holds for the supposedly ultra-defensive pharmaceuticals sector, where global recession coincides with an unprecedented “cliff” of patent expiries.

One consolation for investors - if not staff - may be come in cost cutting. Both Unilever and Glaxo have been ahead of the curve in improving efficiency in their operations in the good times; now both plan to drive their savings programmes even harder.

Bank executives beware. Turn your microphones off during what are likely to be stormy shareholder meetings this year.

Insults are likely to fly at many bank AGMs this year from shareholders angry at their board for losing billions, sending shares crashing, making ill-advised purchases or for their role in the global economic crisis. Bankers are unpopular after more than a year of grim news.

But an unnamed director at Santander lacked humility this week.  After heated questions from the floor about the Spanish bank’s purchase of U.S. lender Sovereign and its exposure to the alleged Bernie Madoff fraud, some shareholders applauded a critical comment.

“Bastards. Listen to them clapping,” the director was heard saying after his mic was left on.

It rekindled memories of Jeffrey Skilling, the disgraced head of Enron who once called a critical analyst an “asshole” in an earnings conference call. But shareholder meetings are often stormy in Spain, and there has been little backlash, whereas in Britain and elsewhere the latest comment could have prompted a bigger furore and a hunt for the culprit.

But it serves as a reminder to executives to put their hard hats on when they meet shareholders this year.

Business bosses, it seems, are as much in the dark as the investors who buy stocks in their companies.

That is the worrying conclusion of a new survey from Booz & Co. 

After quizzing more than 800 senior managers, it found 40 percent doubted that their company’s leadership had a credible plan to address the economic crisis and an even higher number - 46 percent - were not sure that their top management could carry out the plan, credible or not.

Alarmingly, even at the CEO and board level, one third of those responding were sceptical of their own plans.

“It appears that the speed with which the crisis hit and the subsequent volatility has left many senior leaders uncertain of how to move forward and whether they should be in survival or opportunity mode,” says Booz partner Jake Leslie Melville.

But despite not being sure what to do, senior managers are clinging on hopefully. More than half of those questioned thought the crisis would ultimately have a positive impact on the competitive position of their companies.

If Lithuania’s experience is anything to go by, Spain may regret its declaration that it would rather Russian oil company LUKOIL did not buy a major stake in its largest refiner, Repsol.

Russian oil company LUKOIL is in talks to buy around 30 percent of Repsol, one of Western Europe’s five largest non-government controlled oil companies by market value, sources close to the matter say. Analysts think the move could be a prelude to a full takeover, which would be the largest overseas acquisition by a Russian company.

Spain’s Interior Minister Alfredo Perez Rubalcaba said on Tuesday he would prefer a different buyer. Rubalcaba didn’t say why LUKOIL was persona non grata in Madrid but analysts think the company’s nationality is the reason.

Europe relies on Russia for around a quarter of its gas and much of its oil. EU leaders fret about their reliance on Russia for energy supplies and recent moves by Russian companies, especially state-owned Gazprom, to buy up European energy infrastructure such as power stations and gas networks, have prompted Brussels to consider investment restrictions.

For LUKOIL, Madrid’s hostility is ominously familiar. In 2006, Lithuania opted to sell control of its Mazeikiu refinery to Poland’s PKN Orlen, rather than LUKOIL. Analysts said LUKOIL, and TNK-BP, another Russian oil major, lost out because the Lithuanian government feared a Russian buyer would give the Kremlin too much influence over the Baltic state’s economy.

 Shortly after the deal, Russia shut an oil pipeline to Mazeikiu, saying it needed to be repaired to avoid a leak. The pipeline has not restarted and Russian technical watchdog Rostekhnadzor said in September at least another 18 months would be needed for repairs.

 Lithuania said the shutdown is a politically motivated action linked to its decision not to select a Russian buyer.

Spain is not currently a major buyer of Russian crude or gas but a deal signed by Spanish utility Gas Natural and Russian state-controlled export monopoly Gazprom earlier this year might change this in the future. Also, Repsol has upstream interests in Russia, which it hopes to expand.

How will Moscow react to this latest snubbing of one of its largest oil companies?

Some financial firms, but not all, will be saved. The pattern was set with Bear Stearns in March and repeated with Fannie,  Freddie and AIG this month — but not Lehman Brothers. Information Arbitrage lays it out this morning here.

“Unwittingly or not, Treasury Secretary Paulson has effectively created the Paulson Doctrine. The doctrine states that firms that he deems too big to fail (but we’re not exactly sure where the line is drawn: LEH? No. BSC? Kind of. MER? Maybe. AIG, FNM and FRE? Definitely.) get the U.S. Government (and the U.S. taxpayer) as new senior shareholders, while the others are either left to execute an orderly private markets Good Bank/Bad Bank restructuring (if they can, like Mellon in the late 1980s) or a hurried Chapter 11 Good Bank/Bad Bank restructuring (if they can’t: see BCS/LEH circa 2008).

Sure, the headline reads that the Fed bailed out AIG, but was anyone other than Mr. Paulson pulling the strings? I doubt it. So what of this doctrine, and what does it mean for the global financial markets, the integrity of the U.S. regulatory regime and the U.S. taxpayer?

As for the Federal Reserve-backed rescue ofAIG, Reuters’ Emily Kaiser says that the “US central bank may have wiped out what credibility it won resisting Lehman Brothers’ rescue plea, and opened its door to countless other companies to come calling for cash.”

What do you make of the ‘Paulson Doctrine’?

Picture: Treasury Sec. Paulson/REUTERS/Paul Szep 

Britain’s banks may have borrowed over 200 billion pounds from the Bank of England, four times the amount they were expected to take under an emergency liquidity scheme. It leaves them facing a sharp funding strain next month when the rug gets pulled away.

Alastair Ryan, analyst at UBS, reckons banks have taken over 200 billion pounds under the BoE’s Special Liquidity Scheme since it was offered in April. They had been expected to borrow about 50 billion pounds, although estimates were lifted to near 100 billion as wholesale markets stayed closed. The scheme allows banks to exchange hard-to-trade mortgage assets for government bills.

The problem is the BoE isn’t planning to extend the funding beyond a Oct. 20 deadline . If the borrowing from UK banks has been as high as Ryan estimates, it will have eased a short-term problem but shows how much the liquidity is needed. It also leaves even more medium and long-term funding that the banks will need to replace at some point.

European and U.S. central banks aren’t closing their funding windows. By shutting its window the BoE is pinning its hopes on securitisation markets re-opening, but that seems unlikely soon and could force banks to further shrink their mortgage books at a tough time for them and the housing market.

As the deadline looms, UK regulators, criticised for their handling of Northern Rock at the start of the credit crunch, will face mounting pressure to extend the scheme as confidence among UK banks clearly isn’t back yet.

Adecco, the world’s largest staffing firm, now has six weeks to either make a formal offer for British rival Michael Page or walk away and leave the company in peace for at least six months.

White-collar staffing firm Michael Page has so far rejected  informal offers from Adecco, which would value the group at 1.3 billion pounds, and management has stressed its desire to remain independent.

But now may be the optimal time for Adecco to snap up Michael Page as shares have lost 26 percent of their value over the past 12 months on concerns about companies cutting back on hiring as a result of slowing economic growth.   

Will Adecco, which has a warchest of 1.4 billion euros ($2.06 billion), brush aside the frosty reception and make a formal offer for Michael Page? Or will it walk away?

Even if the Michael Page bid fails, Adecco still has several takeover options in Europe and the United States, analysts reckon.