This is a partial transcript from Your World with Neil Cavuto, December 6, 2001.

BRENDA BUTTNER, GUEST HOST: Well, the market ignited yesterday. And that fire hasn't died down yet. Is it really a sign of recovery or just too soon to tell? Here with plenty of opinions is the chairman of investment policy at Gruntal & Company, Joe Battipaglia. Hey, Joe. Thanks for joining us.

JOE BATTIPAGLIA, CHAIRMAN OF INVESTMENT POLICY, GRUNTAL & CO.: Good evening, Brenda.

BUTTNER: So the question is, where next? Up?

BATTIPAGLIA: I think we go higher here, because we have had essentially the recession, the contraction, the capital spending, the profits recession. We have had now a terrorist event in September. And from those lows, we're up 20 percent on the Dow, 40-plus percent on the Nasdaq. I think this is the beginning of the next leg of the bull market.

BUTTNER: Back in June on Bulls & Bears, you predicted that we would see Dow 12700 by the end of the year and Nasdaq 3000. Do you think we'll come close to those kind of gains in the next month?

BATTIPAGLIA: In honestly, I am a year early. I think that's the target for the year 2002. We've got to come back from the lows that we reached in September. But as this cold war unfolds — and the U.S. has significantly degraded the terrorist response — confidence is restored. And the capital spending cycle starts to kick in again. And that is how you can get to those new highs by the end of next year.

BUTTNER: Techs are really on a tear. We're talking Cisco up 95 percent from its year low, Sun Micro the same, Dell up 85 percent. Isn't this optimism a little bit overdone?

BATTIPAGLIA: I don't think so. I think what we're seeing is technology stocks becoming the real cyclicals of the information age, which means to say that, when you are in a recession, their profits disappear, but when they start to grow again, their profits recover. And now that we have substantially lower interest rates, the market will accommodate higher p/e.

So I'm not too worried about a 50 p/e on a name like Intel, Cisco or what have you, because I know their earnings growth rate will be faster for what we have seen for other cyclical type of companies in the information age as they recover. And, therefore, the rebound here could be quite substantial.

BUTTNER: You mentioned Intel. It is quite expensive. It's four times, I think, the average S&P 500 stock. That doesn't scare you?

BATTIPAGLIA: No, it does not, because these companies have the faster growth rate, the higher return on equity. And they do have a global opportunity, because once the U.S. recovers, the global opportunity is if they recover, too, which is business for these companies.

BUTTNER: And, in fact, Intel on its conference call, just out saying that revenues were better than expected and demand is better than expected.

BATTIPAGLIA: Yes, let's add one other element to this. Analysts have given up on their companies and on their sectors. I haven't seen such pessimism in quite a long time. So the hurdle is much lower. So when a company like Intel can say, hey, it looks a little better, the analysts will race to raise their estimates. And once you see that happening, it becomes a phenomena across the whole S&P 500, across the Nasdaq 100. And I suspect that, all through the first half of next year, estimates will be raised. And just as the market fell when they were being lowered last year, it will rise as these expectations go up.

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BUTTNER: Very quickly, how much of this is panic buying, people just piling in to get the advances?

BATTIPAGLIA: I'm not sure it is panic buying. I think it's funds having cash to buy, because investors haven't given in, and investors saying, hey, it's time to come out from behind the door. The war on terrorism is going on our way. The economy is going to start coming back. Let's get in.

BUTTNER: OK, thanks so much, Joey B. from Gruntal & Company.

BATTIPAGLIA: Pleasure.

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