from crisis to comeback: why investors are keeping their eyes on europe. in today's cover story, fallout from a patent battle. what it means for the wireless marketplace. plus, a deadly virus hits farms across the nation. and, could a single hotel chain have a domino effect on an epic labor fight? that's all ahead on today's first business! you're watching first business: financial news, analysis, and today's investment ideas. good morning! it's tuesday, august 6th. i'm chuck coppola. angela miles has the day off. in today's first look: most u.s. stocks fell on word that the fed is closer to curbing quantitative easing. the dollar dipped slightly, but

the nasdaq gained. the dow finished the day down 46 points, s&p down 3, and the nasdaq up 3 points. gold dropped slightly, but stayed above $1300. the washington post is being sold to jeff bezos, founder of amazon.com, for $250 million. the deal includes all of the post's newspaper and media assets except slate and foreign policy. american eagle nose dived 16% after the teen clothing retailer cuts its second-quarter outlook in half. abercrombie & fitch also fell. better times in july from 16 non-manufacturing industries in the u.s. - everything from arts and entertainment to retail, transportation and warehousing. glen schultz of performance trust joins us to help sort it all out. hi there, glen. - hi, how are you? - i'm doing all right, and i'd like to know, the rate for the non-manufacturing sector seems to be accelerating. how is this happening if job growth was just 162,000? - one of the things that we saw

at the beginning of this year was employers beginning to back off in terms of hiring. so, we saw that first-quarter slump in gdp. that's happened to us year-over-year now for, i think, the past three years or so. so employers polled back a little bit on that. the ism indexes, manufacturing indexes, they've shown a rebound. they were stronger than they've been in quite a while, and those are really leading indicators of employment. so, the expectation is that as we move into the second half of this year, we're going to see payrolls begin to expand. - so what does this mean for the bond market? let's go there now. - what this means for the bond market is that bond market participants are going to begin to up the probability of the federal reserve tapering its bond purchase program, meaning that they're going to begin cutting back that bond purchase program. so as the federal reserve sees manufacturing and non-manufacturing pick up, payrolls begin to expand, they may become confident that it's time for them to begin to taper or reduce the amount of bonds that they're purchasing on a monthly basis. - interesting. two that didn't

expand: mining and healthcare. i'm curious why healthcare didn't expand - it contracted last month - if obamacare is on our doorstep. - my sense is that that sector is going to be going through a period of consolidation as they figure out how to deal with obamacare and begin to see the unintended consequences of obamacare. my sense is that for now the thought process is, do more with less, until they see how things shake out. - glen schultz of performance trust, thanks very much. - thank you. thanks, chuck. did the head of the dallas fed give a hint about who might not take over for bernanke as chairman of the federal reserve? that's the speculation after richard fisher was quoted as saying what's needed is a leader with "great humility" rather than a "prima donna." he went on to say that there are some - other than front runners fed vice chair janet yellen and former treasury secretary lawrence summers - who are contenders for the top spot, but who aren't being discussed in the press. fisher said he was confident president obama would make the right pick.

in the wake of a debate over whether or not banks should be allowed to own physical commodities comes word that goldman sachs is being sued because of the practice. the bank owns a big chunk of the u.s. supply of aluminum. it has been accused of holding on to that supply, keeping it off the market and thereby manipulating its market price. the class- action suit labels the practice "monopolistisc" and also targets the london metals exchange, which oversees metal warehousing. the lme says that the suit is "without merit." lena khan has been reporting on this story. she says the inclusion of the lme is key: "over the last few weeks, a lot of the attention has focused on the banks - on goldman sachs, jp morgan - and what they're doing with the warehouses, but i think the fact that the lme has designed its rules in a way that enables the banks to create these kinds of queues, that's very significant." the department of justice, the sec, and the federal reserve are all investigating the practice. in today's cover story, the battle between apple and samsung extends beyond stores into the white house, where the obama administration stepped in to referee a patent fight over

a samsung technology that was allegedly used by apple in its early iphones. some say the decision is changing how companies can protect their inventions. "it takes away one avenue some patent owners use." the obama administration says it overturned a u.s. international trade commission ruling in order to prevent harm to consumers. if it hadn't gotten involved, apple would have been banned by the itc from selling older iphones and ipads in the u.s. but samsung, which claims apple infringed on its patent protection, will still be allowed to seek monetary damages. "the patent is so broad. if successful, they take that win and pound on everyone else. so it's not just apple." tech analyst rob enderle says the first such itc veto in decades marks the end of an era of keeping products off shelves due to violating "standard- essential patents," or those broad inventions covering basic functions - in this case, connecting to a wireless network. "these broad patents shouldn't

be allowed, because they would curtail large portions of the industry and keep those portions from being competitive, and we do desperately need competition. you get one vendor that owns smartphones, and prices would go through the roof." "if someone invents broadly, they should be able to get a broad patent." gerstein says such patents are generally available through licensing fees, which may decrease in the future as a result of the veto - and that could mean savings for consumers. but enderle says the costly two-year court battle between apple and samsung has "undoubtedly" pushed up prices, and highlighted the increasingly litigious nature of the big players. "the whole patent system was designed to protect the small inventor, and it has been badly broken for a long time." "i don't think the system is broken. i think there's improvements that can be made." the patent attorney pointed out that a different set of rules

may eventually affect technology patents, where an idea can reach the market quickly, versus other patents like biomedical, which can take many years to recoup costs. around the world, tablet computer sales dropped nearly 10% in the second quarter, according to research firm idc. apple still holds the lead, but that's been chipped away. last year, it owned 60% of the market, but that dropped to 32.4% this year, and google's android operating system now controls 62.6% of new tablets sold. researchers predict tablet shipments will surpass those for pcs within a year-and- a-half. a look now at the earnings that are moving stocks this week. tyson foods jumped monday after reporting higher revenue and earnings for the third quarter. the company says demand for chicken and beef is up. shares climbed more than 4% yesterday. shares dropped more than 4% at ubs. the bank said earnings fell short, following a decrease in revenue in emerging markets. jamba juice rose 5% in after- hours trading. jamba results were in line with wall street expectations. the company says

it plans to add locations in the u.s. and overseas. the third time's a charm - or so the justice department hopes. it's trying to block for a third and final time the nearly $20 million severance package being handed to outgoing american airlines ceo tom horton. the doj's bankruptcy watchdog program acting on behalf of creditors including bondholders says the severance exceeds payments 10 times the mean severance to employees. bankruptcy judge sean lane, who approved american's merger with u.s. airways after american's bankruptcy filing, will hear arguments next week on whether horton's severance amount is unlawful. air travel is up, and so are the wait times at airport security lines. air travel is up 6% from last summer. at lax in july, the maximum wait time was 57 minutes - that's five minutes longer than it was a year ago. add to that a three-year study from the government accountability office that found, since 2010, misconduct among tsa workers also up - 26% - most of it for being late to work, excessively absent, and for sleeping on the job.

tesla, the electric vehicle darling of wall street, may find one source of its profits run out of juice this fall. regulators in california are thinking of eliminating the zero-emission credits essential to tesla recording an $11 million profit in the first quarter. currently, the car- maker earns credits not because its batteries recharge quickly but, because the battery pack itself may be swapped out in less than two minutes. tesla shares have soared this year, partly because of the allowance as well as sales of its electric sports sedan. the company reports second-quarter earnings tomorrow. pork prices may be higher this fall due to a deadly virus that is wiping out thousands of piglets in 15 states. the porcine epidemic diarrhea virus, also known as ped, has been reported in about 200 hog facilities from new york to south dakota and as far south as arkansas. the virus was previously known to exist only in europe and china. "this could be something that pe

hoof-and-mouth disease we saw in the u.k. about 15 years ago, or it could be something that's localized. ultimately, the pork industry here in the states is almost a $100 billion industry, and what percentage of that is affected will probably be small." that was commodities trader scott shellady. he adds that concerns are heightened because the u.s. just sold its largest pork producer, smithfield foods, to china. still to come, light at the end of the tunnel... the bright spots in europe's recovery. that's later. plus, what some hotel chains are doing to ease labor tensions. but first, housing help: how to submit your housing recovery questions to the president for an answer. that's coming up.

president obama continues his campaign-style tour on middle- class issues across the country this week. today, he's in phoenix, an area hard hit by the housing crisis. lisa foradori joins us. she is from jp morgan chase. good morning. who's buying, and how's phoenix doing these days? - from a buying prospective we're starting to see younger,

dual-income couples getting into the market, which is good. and the reason they're doing it is there's some positive signs. speaking specifically to phoenix, when we look at our chase mortgage originations, year-over-year we've seen over a 50% increase in originations from 2011 to 2012. but then what's really important about phoenix is we're seeing the home values increase. so, buyers are looking to see that those values are increasing, and they're also making sure that- they want to be confident, so they want to see that unemployment rates have remained steady. what we're seeing it is, unemployment rates in phoenix are lower than the national average, so phoenix in general is a very hot market for us. close to 70% of our total originations in 2013 are from the phoenix area. so, we're seeing a good recovery there, we're seeing these younger couples, dual-income couples, getting into the market. so it's encouraging. - it doesn't appear that it's flippers anymore buying cash-on- hand these properties as investments. it looks like actually families now are starting to purchase. is that

correct? - that's right. - let's talk a little bit about sellers. what sort of advice do you have for people who have been holding on to their homes, holding on to their properties, hoping for the values to go up? what advice do you have for them? - sellers have to consider the fact that if they're also trying to buy a new home, rates are at historic lows, so they want to benefit from those great rates. in addition to that, as values go up, they want to make sure that if they're trying to get a deal on the buy side of this, that their pricing fairly on the sell side. so they need to be realistic about the home that they're selling, because they also want to benefit on the buy side of this strong period. - what sort of advice do you have on the flip side, for buyers who are entering the market now? - home buyers, you really want them to educate themselves, so it's really getting themselves ready as a buyer, whether that's understanding their monthly budget, understanding their

credit score, getting pre- qualified to go buy the home, and then use the technology that's out there. we have a great new app, it's called "my new home." it's from chase, and it allows them to search for the homes - 90% of these guys are out there on the internet searching for homes, so this allows you to search for the home. it allows them to take videos, take pictures, take notes on the home. but then it also has a lot of the tools available to understand their budget, what they can afford from a payment perspective, what that rate's going to look like. but then connect with a local mortgage banker. they still, with all this technology, want the ability to connect with someone locally, and so they have the ability just to call a local mortgage banker through their phone, too. - very good. good advice. lisa foradori, thanks very much for joining us. - thank you. the president is boosting the economy one online real estate database at a time. zillow reports that its stock went up $7.29 a share when word spread that the president would answer questions about housing tomorrow on zillow.com. the event will be streamed live beginning at 1 pm eastern. questions will be drawn from facebook, twitter, and videos posted on youtube, instagram or vine. look for the listing #askobamahousing. coming up, stocks to watch as europe enters recovery mode. that's later. first, though, a hotel insider checks in. we'll find out how big chains are handling labor tensions. that's next.

when hyatt hotels in four american cities reached a tentative labor agreement with hotel staff last month, other hotel chains took note. joining us is anthony melchiorri, known as the travel channel's "hotel fixer." anthony, welcome to our program. - good morning, chuck. thanks for having me.

- anthony, hyatt settled with its labor on a number of issues. what did you think of this agreement and what it bodes for other hotel chains as well? - i'm not privy to that agreement specifically, but a lot of the brands have settled these types of issues with unions. as we have bigger mattresses and as more minis go into rooms, it's only fair that employees get compensated appropriately for that. so, i don't know about that deal, but i have been involved in deals in new york city where we have come to an agreement. what it will do is ensure that housekeepers have medical coverage, that front desk agents have medical coverages. in the smaller hotels, a lot of hotel owners don't provide medical coverages. and sometimes they can't afford to provide medical coverage. but where they can, it's very important. housekeepers, front

work long hours, do a lot of hard work, and they deserve to be protected. - anthony, i wanted to ask you also: what do you think the latest trends are in hotels? what are people asking for, what are customers expecting in the hospitality industry these days that you see that hotels need to step up and meet? - really what guest are looking for, especially business travelers, they're looking for convenience, they're looking for free internet service, they're looking for free bottles of water. they're looking for great service. they're looking to really get in and get out. i travel a lot, and i know when i'm going into hotels, i want to get in, i want a clean room, i want a friendly smile, and i want to be out. and what you find is that people are getting away from the bigger and better amenities, and really want a clean room, a nice bed, a friendly smile, and they want

their bill to be taken care of easily and efficiently. - so it may not necessarily be the amenities, the additional, the add-ons, if you will. it's more the basics, do a better job of providing the basics. - i really think the hotel industry has gone through a pretty tough time, and now we're kind of out of it, we're getting back to 2007 levels, and i think through that process we learned that guests want service, they want cleanliness, and they're not so interested in all the bigger amenities. i think as a hotel industry, we've become more efficient, and we've been able to understand how to save money, but also provide great service and basic and even some better-than-basic amenities and still be able to make a profit, still, and hopefully in a lot of areas, hopefully provide medical benefits to our employees. - good advice. anthony melchiorri, thanks very much. - thank you very much for having me.

how investors are capitalizing on europe's economic comeback: chart talk is next.

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a lot of buzz about the eurozone, and much of it coming from the strongest manufacturing report there in two years. matt shapiro of mws capital joins us. hi, matt. - how are you doing, chuck? - i'm doing well, and i'd like to know what businesses, what industries in europe you're looking at today. - well, you know, it's welcome news that they're finally coming back. i've invested in several major european shares this past year, and i think you really take a look at the playbook we had here in the united states over the past year, which is, of course, high- quality companies. look at the financial sector, diversified chemicals, and especially growth, that's done so well over here this year. so take a look at those quality, big-name european stocks, such as basf, novartis, roche, siemens, and the like, and i think you'll do really well to capitalize on a rebound. - what about the automakers in europe? - well, volkswagen just hit a relative high, and i'm very,

very positive about them. austerity seemed to work for the europeans, and they're coming back. maybe it's not what we want to do, but autos and cyclicals, my one concern is, here in the united states, they didn't do as well as quickly, so really try to take a look at growth and financials and diversified blue-chips. - i'm glad you mentioned austerity, because i saw today that the unemployment rate in spain is down. does that mean that this phase, this austerity phase in europe is over with? - i don't think so. i'm really glad they're coming back. it's not exactly the policy that we would do in the united states, but, of course, there's the dictates that they have to do over in europe, and it's actually working for them, and i think the european shares are actually under-owned. so, do your homework, and i think the valuations are very attractive, especially when you look at

united states stocks that have been so strong so far this year. - lastly, i can't let you go without asking you about the banking sector. how does it look in europe? - well, it's better. i would stay away from, as you said, spanish banks, italian banks. i invest in dnb asa, which is norway's largest lender. so, take a look at the big ones like barclays and the like, that have less exposure to those sovereign issues in those southern european countries. - good advice. matt shapiro, thanks very much. - thank you. that's a wrap for today. coming up tomorrow, if this record- setting market has you nervous, you're not alone. advice to help you navigate your investing fears. from all of us at first business, thank you for watching.

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