The transition from recession to recovery is underway, and Fayez Sarofim believes we are still in the early stages. The outlook is positive but there are still potential setbacks that could occur along the way. Improving capital market conditions, low interest rates, low inflation, and upward revisions on future earnings forecasts are all potential factors which could carry the market forward. But watch out for the fading stimulus spending, and the withdrawal of liquidity by the FED, as these could heighten the concern about future growth.