CNBC reports that BlackRock is thought to be in talks with Lehman Brothers about purchasing a block of CDOs and mortgage-backed securities, in a copycat of the Merrill Lynch / Lone Star deal announced last week.

BlackRock has already acquired $15bn of troubled assets from UBS (with a nominal value of $22bn). BlackRock raised $3.75bn in equity from investors to buy the paper, while the remaining $11.25bn came in the form of a loan from UBS itself. A similar deal with Lehman is now thought likely. The Wall Street firm is said to be looking to rid itself of up to $30bn in hard-to-value securities.

The Wall Street Journal reports that, during a recent probe into the role of rating agencies in the subprime fiasco, US regulator the Securities and Exchange Commission is thought to have uncovered some embarrassing e-mails sent internally by staff at Standard & Poor's. One analyst is said to have described one security as 'ridoculous' and that 'we should not be rating it'. The reply came back: 'We rate every deal....It could be structured by cows and we would rate it'. Another internal mail, said to have been sent by an analytical manager in S&P's CDO group, said: 'The rating agencies continue to create (an) even bigger monster - the CDO monster. Let's hope we are all wealthy and retired by the time this house of cards falters'.

Finally, Reuters reports that Lehman has sounded the alarm to investors over commodity investments. The firm, which estimates that the funds under management tied to commodity indices are now a massive $297bn, said in a report out last week that 'it is important to recognise the limitations inherent in commodities given their cyclicality and high volatility'. The note also warned that 'we also find a potentially alarming degree of past performance-chasing mementun'. And the Independent reports that the Jefferies-Reuters CRB commodities index was down 10% last month, its biggest monthly fall since 1980. Another indication that the 5-year-long commodities boom may be about to come to an end.

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