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By Jason Stipp and Jeremy Glaser | 06-08-2012 06:00 AM

Taking Action

Many central bank and corporate leaders were at least talking about, if not taking action this week.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to the Friday Five.

Events this week showed policymakers and corporate executives moving into action.

Here to offer the details is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: You're welcome, Jason.

Stipp: So what do you have for the Friday Five this week?

Glaser: We're going to talk about central banks, China, Starbucks, Facebook and Nasdaq, and finally, REITs.

Stipp: So, Jeremy, we did in fact hear from a lot of central banks this week; they are at least talking the talk. What is it say about the state of the global economy that we are starting to hear them discuss stimulative measures?

Glaser: Well, this week, we really got a "well, we might do something or we might not" little dance from both the European Central Bank and the Federal Reserve. The European Central Bank has been a lot more reluctant to act than the Federal Reserve. A lot of that is just that their mandate is really to be focused on inflation--they have been laser-focused on that--and certainly they are very worried about stoking inflation. So, they still haven't lowered interest rates as far as they can, and this week they decided to keep interest rates at their current levels. But they did say they were seeing a lot of weakening in the economy, and they see that Europe is certainly in somewhat dire straits right now.

So, I think hearing that admission from the European Central Bank, hearing that some members of the ECB board are willing to lower rates--it's not a unanimous decision to keep them steady anymore--really had investors hoping that the ECB actually might be a little bit more active, even if they didn't announce any specific measures.

Stateside, the Federal Reserve has been a lot more stimulative. Between quantitative easing and operation twist and other things, they have really been trying to expand their balance sheet, and trying to keep the economy going and moving forward.

I think Ben Bernanke's comments this week [show] the Fed is still willing to act, that they still see weakness. It's also a sign that he sees some problems, [and] that the Fed is willing to put some more measures in place to be more stimulative.

So, what will come of that? When these measures could actually come is anybody's guess. The market is certainly hanging on every word, as they really see monetary policy as one of the few levers that can still be pulled to try to fend off another recession.

Stipp: So, if the ECB and Bernanke are standing ready to act, we did see China actually act and make a move on interest rates there. What does that say about the situation in China?

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