Stocks and stories making headlines today. Lets begin in the middle east. Egypt says its ceasefire agreement has been reached. A sevenweek conflict that has killed more than 21,000 2100 palestinians. Palestinian demands for a gaza airport and seaport will reportedly be discussed at a later date. Also today, the Associated Press signing family members and u. S. Officials is reporting the third u. S. Hostage held by Islamic State militants is a female aid worker and it comes after the Obama Administration authorized surveillance on the militants in syria. That could be a prelude to airstrikes in the region. The Islamic State has become one of the most feared terrorist groups. It is extremely wellfunded. Part cook has more on that of the story. They are doing it through the course of their takeover of seven oilfields in northern iraq, including two refineries in six of 10 oilfields in syria. Generating by some estimates as much as 2 million a day in revenue for the Islamic State. They basically have the capacity for 80,000 barrels a day at those refineries. They are selling crude on the black market for between 25 and 60 barrels. They are again using that money to fund not only their military operations, providing some services to people in those areas, northern iraq, and syria, theyre using it to basically secure their hold on those areas. The challenging thing for the United States that might want to target the Islamic State are not part of the banking system. The usual rules do not apply. Is it all oil money or do they have other income streams . There are other income streams. Oil is the big one at this point. There is extortion taken taking place. Banks where they have had military operations. Multiple banks, they went straight in and took the cash. Jewelry, smuggling, kidnapped for ransom. There was a request for 130 3 million for james foley, initially. They raised more than 10 million in ransom payments alone. Other Revenue Streams but the big one here is the oil money. That is giving them a local funding stream. The u. S. And other companies have not had to deal with before. Is there any thing at this point the u. S. Can do to undermine islamic finances . They have done we have gotten good at squeezing terrorist finances in the past. This will close challenges for the reasons i listed before. There is effort to go after oil middlemen. Helping Islamic State get that revenue. If you can cut that off, you might make more of a dent in their revenue stream going forward. Thank you. We will continue to follow this story. I will be joined tomorrow by the former u. S. Treasury and Financial Intelligence official. He is now director of the counterterrorism and intelligence program. That is wednesday at 2 00 p. M. Washington time right here on bloomberg television. Tensions are high between the ukraine and russia as the leaders of the two nations meet in belarus today. Ukraine presses president says he believes the talks will yield progress, even as most both governments are committing acts of war. Today, the ukraine said it captured Russian Troops on its side of the border. , what are both sides saying about the talks . Heading into the talks, he is perhaps the most optimistic but made the political case on what is happening. They released the video of what they say is rocksolid proof of russian troopers inside ukraine proper. When he started off here, he addressed the Economic Impact and russia could have as much as 3 billion in trade because the ukraine is looking to the west and not the eased. A couple of minutes ago, downstairs in the pressroom, they announced there may be a press conference. That is significant for mainly run one reason. We do not have confirmation that boudin and he have met for a bilateral sidebyside meeting. The fact that has not happened may mean there was not a whole lot of talks. The fact we have not had an announcement that mr. Putin and he has set down together could mean these talks did not amount to a lot. We are getting headlines. The president of belarus saying talks were still complicated. What is its role here . The European Union has namely two stakes. One is the overall economy. Of it is attributable to what is happening with the trade in russia. Is what willrterm happen to Energy Prices in europe and winter. They have not paid ukraine and russia for the gas supply since june. There is a low because it has been cold. If the winter comes and fall turns to winter, that will be not just on ukrainian mines but european minds. Especially if these peace talks do not get started . Yout is interesting what just said, saying the talks were complicated. Earlier, he hinted at the idea that belarus may be the center for future for additional talks. There is a report out of the Associated Press that finland was helping to facilitate secret talks between russia and the u. S. On somehow winding down the conflict in ukraine. But you need the ukrainians there. That is why it could be pivotal in the future. It could be mutual territory but there is not much to talk about. The ukraines are accusing the and they are denying it. There could be talk of additional sanctions there. Fromns nichols joining us belarus. Thank you. Coming up, betting on bonds. Almost all kinds of bonds are doing well this year. Global fixed income on what he is buying and selling. We continue in just a moment. The San Francisco bay area. Since 1989. T allen joins me now from washington with a focus on the economics of earthquake damage in californias winegrowing would region. Extensiveion how and is there any chance they assistance . When you look at the Economic Impact on this particular area, you are looking at both agriculture and agritourism. A lot of the damage has been somewhat isolated. It will remain to be seen how extensive the damage will be. Dataing they look at the to come in but it is too early to tell whether this will be an Early Agricultural disaster. You have people who would normally come there for wine tasting to see the harvest and be part of the experience of the region. Those folks will be worried about act aftershocks. Theyre looking and wondering if this is a safe place of a. Is a lot of folks saying, come here. We want your dollars. Lie was this a bad time of year to hit wine country . Because of the harvest that when underway. We had the drought that sped out the harvest a bit. Part of theto be wine harvest and the season in the area. When youre looking at the toughest time to have a blow like this come to the economy, this will be challenging. This is not the first problem california farmers have had this year. 82 of the state is in extreme or extraordinary drought positions. Youre seeing the crops being harvested early to get whatever they can. That is going on in wine country right now. Does california even show up in the data . It does in the margins in the sense that for some crops such as our this is a good year. Demand continues to be up, even if in some areas, you may have lower production. That is actually helping farmer income because prices go up. Were there any surprises in the report . There were. You saw that while the profits will be less than last years record, it is not as bad as the usda was saying it would be this february. You saw increases for this years forecast in crops and livestock. Livestock could be record. It is the flipside of the prices you have seen in stores. Is good and cattle, it for revenue. Alan joining us from washington. Thank you. Switching gears, this has been a year of superlatives for the bond market. Corporateolume of debt sales in the u. S. Here in almost all types of bonds have done well in 2014. What is next . Chiefchaels is the Global Investor a fixed income and commodities at jpmorgan asset management. Also joining me, lisa abramowicz. The patients of bond investors, has it and rewarded . We have. I have been taught early in my career, you do not fight the Federal Reserve because you will lose. Investors that have been fighting the bond market this year have not only been fighting the fed. They have been fighting the ecb, the bank of england. And the bank of japan. Has gotten them. Is this the feds bond market . Partially. With thelot to do coordinated an unconventional intervention youre seeing from all the other Central Banks. They are forcing government on yields down to lows in what i think is deliberate financial repression. Isnt there a corollary dan damage here . There is a lot of concern this cannot last . Is there a bubble . Theyre ultimately will be. If you look at the history of central banking, it seems to be in the business of manufacturing sequential bubbles. Obviously, when you have the tremendous amount of liquidity being created, it will accumulate somewhere. What we have to do is identify the borrowers binging on the very cheap liquidity. To i think there is a bubble today that will burst, no. Atically, you see bubbles the end of fed tightening, when the fed has drawn liquidity from the system, when they targeted the sector of the economy. Why is this unusual . What is unusual is youre not seeing those signs. Au are seeing very much of global sub trend recovery. Youre not seeing risk inflationary pressure. You are seeing concern on part of the ecb about deflation. We are talking about cutting rates again and buying assetbacked securities and perhaps sovereign debt. Suddenly, the 10 year u. S. Treasury is one of the highyield Government Bond markets. You could sell spain and by 10 year treasuries and pick up about a dozen basis points in yield. What else are you buying . U. S. Treasurys is a good bet. What else looks valuable to you right now . Everything is relative right now. We like corporate reddit. When we look at the Way Companies are managing their balance sheet, they clearly learned from 2007 and 2008. They are all building fortresslike allens sheets. We like highyield in particular. We look at credit spreads of just under 400 basis points. With the false normalized at about one percent, that seems to be pretty good value. In europe, we like the bank capital sector of the market. Is it safe for investors who will retire in four years . Nonhedged . It is a safe bet for the time being. The game changer to me is when you begin to see the fed lift the fed funds rate. Right now, if you own bonds or another asset classic on and you want to book a profit because there are profits everywhere in the bond market now, you end up sitting in cash. There is only so long you will sit in cash earning zero percent , perhaps a negative return in europe, before you go back into some kind of bonds. To raise short rates and that is when we will begin to see some short level. When do you think the fed will move . The middle or toward the end of next year . Toward the end. And you look at how long the fed rate, it negative real has been the longest time in the history of said that they have run a fixed rate. Even if they start from a year from now, youre talking about the middle of 2016 before they are at two percent. That should effectively be a zero real rate. Are youuch leverage seeing, how much risk taking . Are you seeing things that concern you . We are not seeing a lot of that yet. Companies are prudent about the way they are managing their balance sheets. They are more focused on fiscal responsibility. The Housing Market is slowly recovering. We are not seeing signs of stress yet. A lot of the reason is because of the amount of liquidity around. Stress thatlitical is perhaps affecting your strategy . It has not and that has surprised us. When you look at some of the geopolitics that happened over the last year, you would have expected a much greater pullback in the market. We have not seen that. It all goes back to liquidity and the dynamics of Central Banks every month printing new money which never existed before and where does the money go . It directly buys bonds and it feeds its way into other bond assets. When does this end and when is the rally going to stop . The first ede speedbump will not come when qe ends. I agree we do not need qe anymore in the u. S. But i think the market has already adjusted. The first step comes when the fed raises the target. Whether the fed raises the rate or reverse repose on the overnight basis, once they begin to do that, suddenly you can earn something if you take a profit somewhere in the market and leave it in cash. A zerohey get to about percent real fed funds rate, you will not see a lot of correction in the long and of the market. Maybe the fund and. End. Much. Nk you so i appreciate it. Still to come, and on the markets check. When bottom line continues in a moment. Bloomberg television is on the markets. Our senior markets corresponded julie hyman is standing by with the details. Good afternoon. Take a look at stocks. We may end the day over 2000 for the s p 500. That would be the first close above that level ever. We briefly touched it yesterday but could not quite hold it. We had better than estimated Economic Data. Energy stocks are leaving the game during the session. Got a whopper of a deal. Burger king buying tim hortons. Thirdlargest the fast food company. Burger king will relocate its headquarters to canada. Burger king shares are falling today. , a records is higher high. American airlines said it was withdrawing from all websites. The announcement comes following a dispute over a new contract, not the first time. We will have more on the markets in 30 minutes. More bottom line is next. Welcome back to the second halfhour of bottom line on bloomberg television. Not the two top house members that have the most influence over tax policy here they are not the only ones. A bloomberg analysis found even more members of congress benefit from moving american corporations to other countries to avoid large tax bills. Richard, what did you find. Find . We look at the people who were on the taxwriting committee committees who said, it is anyone invested in these immersion deals . You have got the house speaker, john boehner, and steenkamp. The priceem, after was announced, both of them still have an interest in holding electronic. You have lawmakers who have a real say on the issue who are also invested personally in the deal. It raises conflict of conflict of interest issues. It does. Is this iso remember completely legal and the members investment say, advisors handle all of these decisions. It is not something where the speaker of the house is making calls day by day. They are creating a level of distance between what theyre doing on policy and what is happening in their personal finances. What are the legal question away the tax inversion works is you set they say, lets work merge with a company and we will put new headquarters of the company outside the u. S. And we will get a lower tax rate there. That has been beneficial to the shareholders of the foreign companies. There are not that many potential foreign targets out there. There has been a real premium for those companies to offer themselves, basically, to the u. S. Suitors out there. Are waitingpanies to see what happens with the law and the potential treasury regulations. How is the policy debate shaping up . You have got a lot of attention to it and the burger king and tim horton deal brings more attention to it. You have got Congress Gone at the moment. We are in an odd space where there is a lot of interest and debate in congress, but congress is not here in washington. When they get back, they will only have two or three weeks before the election. It is looking unlikely at this point they will be able to pass a law during that time. That will turn the pressure back to the treasury. Were hearing the Senate Majority whip of illinois expressed disappointment about this burger king and tim horton deal and what of a lot of people are calling evidence of a tax inversion. If members of congress are known for one thing right now come it is the inability to take action. See anyld we expect to tax bills become law . It is hard to tell. Theyre looking at this from a totally different approach. Democrats say, lets pass something click and make it harder for u. S. Companies to do in versions and republicans say, not really. Lets look at a broader test form and lower the Corporate Tax rate and rejoin a much broader debate. One of the criticisms right now, the tax rate, if it were lower, you would not have these theiries looking to have tax rate someplace else. It would take some of the pressure off. Be incentivesays for them to look at the most efficient place to be headquartered and that may not always be in the u. S. The real gap between the rate here and the lower rate abroad provides a lot of incentive now. There is wide agreement you would have less reason to do these deals. Not necessarily no reason but less reason if there were a cap and the tax rates. All right. Richard, thank you so much. Be sure to check out the latest edition of bloomberg businessweek, featuring the burger king cover story and the focus on tax in versions. It hits newsstands today. Ready to go with our new business we cap. Hurricane season is underway. We will check the forecast for the storms rolling off the coast when bottom line continues in just a moment. Welcome back. It is time for todays latin america report. Looking for a runoff when brazils candidates meet for a debate tonight. Seven candidates were scheduled to take part. Senators are in a statistical tie for second place, with 21 and 20 support, respectively. Lets less , than the sum of the other candidates she would need. Less than a month after argentina defaulted for the second time in years, the key rival of paul singer in the legal fight over the nations debt. Show partners of funds are joining a group of for failing to distribute 298 million worth of Interest Payments on argentine debt. Thisis your report for tuesday. The busiest part of Hurricane Season is getting underway. Joining me from washington is the cofounder and president of commodity whether group, which helps its clients manage and mitigate the impact on ag