Meanwhile, in the recent 34years between 1976 and 2009, the average yield of Moody's AAA bonds was 8,36% vs 7,63% returned by S&P500. The Fed Funds Rate averaged 6,13%. Even that the risk premium for S&P500 was a little higher - 151 pp - than in the first analyzed period, it was below the premium on AAA bonds!
It is also worth mentioning that no straight correlations between GDP, Fed Funds Rate and GDP existed
correlation GDP Fed Funds Rate
S&P500 -0.0383 -0.0689
GDP vs Fed Funds Rate vs S&P500 [%] (1955-2009)
XLS file: http://www.mediafire.com/?yonzywyzizj
Data sources: FFR & AAA - Federal Reserve, GDP - BEA, S&P500 - Stooq
Note: the previous post, "Where is the risk premium?" was temporarily removed for revision and update.