Usually it's simple: Sometimes the Fed is your friend (when it's loosening) and sometimes the Fed is your enemy (when it's tightening).
Right now we're not really in either mode, and answering this question is a little more complicated than normal.
But the Fed is your enemy now, not because it's tightening, but because everytime it's in the news it causes a loss of confidence, by virtue of the fact that it's hand seems so unsteady. It's not just divided between the doves and the hawks.
It's downright splintered.
There are doves, hawks, would-be doves who think there should be more easing only if the economy deteriorates more, would be doves who would be incline for more easing, except for the fact that they don't think that would do much good, and people who think that the Fed can't do anything because the problems of the economy are structural.
That was basically the lesson from the report last night.
So all you can get from the central bank is a lack of confidence.
Mike O'Rourke of BTIG has more on this unusual state:
Since the Journal had the right policy action coming out of the last meeting, we suspect they will be right again. Therefore, we will watch for indications that the FOMC will allude to small scale asset purchases. We think it goes a step further than what we were advocating prior to the August meeting, re-opening the asset purchase program but only using it if necessary. In this case, they will likely use it on a small scale in order to reinforce the point that they are here and ready to support the recovery. The timing is remarkable, considering it is an election year. As confidence in corporate America slowly rebounds, we suspect this will likely be intended to send the message to those on the fence about hiring or increasing capex that the Fed is willing to do some handholding to get them off the fence.
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