SET Index : US debt deal should see our 1140-1145 squarely hit

Readers can be forgiven thinking politicians the world over are lunatics, mad en and woman living in a delusional bubble.  Actions Stateside this past fortnight certainly concur with madness, but even though the US is leaving it to the last minute to make a debt ceiling deal, we are confident the news will hit the wires shortly, and with it the SET should be able to hit our target at 1140-1145.

Performance so far this week can hardly be deemed bad, but a catalyst or two is needed if the blue chis and institutional flows are to lead the market up to 1140 or so.

Indeed the SET could go quite a bit higher given the world markets get a break from the US and Europe debt. 1160, 1180, all possible if we get a quiet period and some good news – like a slightly better than expected US Q2 GDP print on Friday.

If all goes to hell and the US can’t agree an increase in the debt ceiling and default looms, the answer is simple : They (US Treasury) will continue to raid Social Security and borrow beg and steal from other internal sources, and in the end the ceiling will be raised. This scenario is very unlikely however, but if it plays through expect a major downwards gap on the markets – to 1060-1070 if not lower on the SET

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