And Bank of America arbitrarily assigned a higher value to its Merrill Lynch assets. Earnings reports this quarter may also impress investors. Trade revenue is up on the big spread between treasury and other bonds. And the banks earned fees in May helping each other raise capital.

Let’s get the cautious bit out of the way first. One swallow does not a summer make.

Excellent! Now we’re all nice and circumspect. I can reveal the big news.

HBOS has sold some mortgage-backed securities to someone. We don’t know who, because the details are all secret. But HBOS got £500 million for them — not too shabby!

This is a bit of a landmark. It’s the first successful sale of mortgage-backed securities since the credit crunch kicked off last year.

Even billionaire misery-merchant George Soros cracked his face.

“The acute phase [of the credit crunch] is behind us,” he said. But, like us, Soros was wearing his cautious helmet (in fact, his is permanently welded to his head).

He reckons the economic fall-out will get worse for Britain. So does Michael Spencer, head of ICAP, the interdealer broker that handled the sale.

So, donning our robes of wariness, exuding an air of “Let’s not get carried away”, and probably also holding a couple of horses, shall we dive in and ask that perennial question:

Is the credit crunch over?

“There’s definitely a market for mortgage-backed securities,” says Theo Casey, one of our research Mafia. “But here’s the rub: the market is highly vulnerable to swings in sentiment. Bearish sentiment doesn’t simply lower the price — it causes the market to disappear entirely”.

But commodities man Garry White reminds us of an age-old investment adage:

“The best time to buy something is often when everyone else says don’t”.

So it could be that, a year or so from now, those who were brave enough to buy these HBOS assets will be banking a tidy little profit.

Of course, these are mortgage-backed assets, so a lot depends on what happens in the UK housing market.

But that’s a whole other debate — and these Clothes of Careful are getting heavy…

Rock boss Sandler hanging onto our money

OK, OK, you’ve twisted my arm. A very quick cameo for the housing market.

As you’re probably aware, you and I, through our taxes, are underwriting Northern Rock’s mortgage book. To the tune of around £75 billion.

Not only that, but the Rock owes the Bank of England £24.1 billion. It is going to pay it back. Honest, guv. Only… well, there might be a bit of delay.

The original plan was to pay back the loan by 2010, and free the Treasury from its guarantees by 2011.

But yesterday, Rock supremo Ron Sandler told a Treasury Select Committee that they might have to wait a bit for the money.

The only asset the Rock really has is a big mortgage book. But the value of that collateral rises and falls with house prices. Right now, house prices are falling.

And there are other worries as rival lenders lure away the best customers.

As Sandler admitted: “There is a risk of adverse selection. Those customers who represent a better credit risk will get mortgages elsewhere. We do expect it will increase the riskiness of our book”.

So, as we suspected all along, you and I are in possession of a really bad business. A business which could struggle to pay us back.

Never mind the Helmet of Caution — it’s time to put on the Jumper of Indignation.

Darling to Businesses: “Don’t leave, I can change!”

Sometimes, you just wish you could take back something you’ve said.

I’m sure we’ve all been there — the argument with our partner which flared up over nothing, just a daft remark, something we didn’t really mean. And then we spend the rest of the evening (or the week… the month… the entire relationship) grovelling and apologising.

Alistair Darling knows how we feel. All he did was make a silly little slip — “Let’s maybe tax profits that British companies make abroad!” — and now he’s been forced to bow and scrape and beg for forgiveness.

So it was that yesterday Darling made some heavily pro-business statements in a speech to the Confederation of British Industry (CBI).

“Business is increasingly mobile,” he said. “Tax rates have to be globally competitive. Business is the linchpin of the British economy.”

He was probably wearing an ‘I ♥ Business’ t-shirt under his suit…

He’s right, of course. Tax rates should be competitive. Otherwise the businesses we rely on to generate the nation’s wealth will simply pack up and leave. Some already have.

The fear is that this debate could prove to be the catalyst for a business exodus. Just in case, businesses have already looked into the possibilities of moving elsewhere.

Businesses know that Ireland, for example, offers a corporate tax rate of just 12.5%. In Britain it’s 28%. Simple arithmetic says move to Ireland.

Now that some businesses have looked at the logistics of upping sticks, they may consider it’s worth taking the plunge — even if the Treasury’s proposals are dropped.

Time for another wardrobe visit — this time to fish out the Trousers of Concern.

I focus on the main UK stories, and while obviously there was news, nothing had set my pulse racing. Both the Government and the Bank of England had let me down for once by failing to do something spectacularly foolish…

But while my beat was relatively quiet, it was all going off on Planet Manraaj.

“Nothing happening?!” he said. “Oil’s just hit a new record. And forget the strike at Grangemouth — what about the one in Nigeria?”

Workers at the Exxon refinery in Nigeria are striking over pay. Nigeria is Africa’s biggest oil producer. But its production has plunged 50% since Friday. The strike instantly wiped out 850,000 barrels of output.

It is this strike, not the one in Scotland, that lies behind the record oil price, whatever British papers might say.

But as Manraaj explains in today’s Profit Hunter, instability in Nigeria is opening up intriguing investment opportunities elsewhere in Africa…

Barclays rating cut makes rights issue more likely

On Friday we reported on the possibility of a Barclays rights issue. Barclays themselves were being vague about it, but now it looks like their hand may be forced.

Ratings agency Fitch has downgraded Barclays from AA+ to AA. Fitch cites Barclays Capital’s exposure to sub-prime and other volatile mortgage-backed assets as the reason for the downgrading:

“Strategically, Fitch understands Barclays Capital’s motivation to seize the opportunity created by problems at other investment banks and to look to expand its product and geographical franchise, for example in the US,” said the ratings agency. “However, Fitch believes its investment banking operations and ambitions expose Barclays to risks and volatility that are not in keeping with a AA+ rating”.

Another bank currently mulling over a rights issue is HBOS. At 5.7%, though, HBOS has a strong capital ratio. So while Barclays could ask for as much as £8 billion, HBOS is rumoured to be considering a rights issue of £2-4 billion. In fact, it may simply opt to ride out the storm rather than bother its shareholders by asking if they’ve got any spare change.

Fund manager Barry Norris of Argonaut Capital has an interesting take on the sector – don’t buy banking shares, get the bonds instead.

“Over the last six months we have seen that central banks are not prepared to let a bank go down so you have the risk profile of gilts,” he says.

Our research director, Theo Casey, thinks he might be onto something. Though Theo remains wary of buying banking stocks, he concedes there could be some merit in holding the debt.

“Some of the banks are strapped for cash right now,” he says. “So they’re looking for ways to bring in capital. That includes issuing bonds at very attractive interest rates.”

OFT swoops on supermarkets

Away from the banking sector, and the Office of Fair Trading (OFT) has kicked down the doors of such retailers as Tesco, Sainsbury’s, Asda and Morrisons, shovelled a load of suspect documents into a bag, and wandered off to continue its investigation into price collusion.

The wonderfully named economist Heinrich von Stackelberg came up with a theory to explain why firms in an oligopoly (a market, like the supermarket industry, which has only a few players) often raise there prices at the same time. He called it the leader-follower model, and used a lot of complex equations to prove his point that it wasn’t just down to price fixing.

But some economists scoff at this idea. They say leader-follower is nothing but a sham behind which wrongdoers hide — and it seems the OFT agrees. Sainsbury’s and Asda have already been fined after admitting collusion over dairy prices. The current enquiry, believed to be the biggest in the OFT’s history, focuses on prices for groceries and health and beauty products.

It always struck me that price checking, by which supermarkets aim to ensure their prices are no higher than their competitors, could also work the other way. As long as they’re no higher, why make them any lower either.

In theory, of course, price checking should result in us being charged the lowest price that still renders a profit for the retailer. But the theory only works if the supermarkets don’t break the rules.

The OFT will soon determine if they have.

“Peak Ship”

“China is sucking up commodities so quickly that global infrastructure can’t cope,” says Garry White. “Ships at ports around the world are having to queue before they can dock.”

On one day last week there were forty-one ships in a big long line waiting to get into Newcastle, Australia.

You see, China needs an awful lot of steel. And to make that steel, it needs coal. It gets most of its coal from Australia. But the bottleneck in Newcastle is slowing things down, and pushing up the coal price all around the world.

“It’s Peak Ship!” says Garry, coining the phrase that will surely make him famous.

Garry keeps his ’beady eye’ (that’s a clue) on one commodities indicator that most analysts overlook. Last year it collapsed, and many commentators predicted doom and gloom…

But, as Garry explains, they were all dead wrong — and if you don’t get into this market now, you’ll be kicking yourself later…

All hail Frank Hemsley!

Last week I promised to have another crack at Robin Tracey. Robin, you’ll remember, is a millionaire trader who works from home. Two months ago he started sharing his trades with a select few individuals.

A couple of weeks ago they closed their first trade — for a very tidy profit. My colleague Frank Hemsley had managed to get some people into that trade, so he was very happy.

“Any chance you could get Robin to share his moves with some of my readers?” I asked him last week.

“I can try,” he said.

And Frank was as good as his word. Over the weekend he spoke to Robin, and it looks like it’s on! I don’t have any details yet, but I should be able to tell you more tomorrow…

Until then,

Ben Traynor