USOI - One Shock Case For 'Irrational Exuberance' Reaching A Quarter-Century

• Per the Fed’s November 2021 estimates for Industrial Production in the United States, American domestic crude and natural gas output continues to be constrained. And not by a little.
• Compared to the prior peak way back almost two years ago, the amount of overall energy pulled out of the industry remained about 7.6% less last month than it had been twenty-two months ago.
• Regardless of any changes price-wise to both crude and natural gas, supply of each hasn’t really changed. This supply shock is the key reason why the prices of both have skyrocketed.
• October 21 saw a major reset as the Treasury Department auctioned 5-year TIPS, as a result of which, demand for it - in the face of rising oil prices, which bleed most directly into the CPI TIPS holders get reimbursed for - was out of this world. This added an enormous 17 bps to the 5-year inflation expectation.

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