The Cox Connection

Vol 4 Issue 3 ||July 2021

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Market Performance as of 6/30/21


  • S&P 500 TR: QTD 8.55% YTD 15.25%
  • Dow Jones Industrial Average TR: QTD 5.08% YTD 13.79%
  • Bloomberg Barclays US Aggregate Bond: QTD 1.83% YTD -1.60%
  • Top 3 US Sector Performers 2Q: Real Estate, Technology, Energy
  • Worst 3 US Sector Performers 2Q: Utilities, Consumer Staples, and Industrials,


  • MSCI EAFE (unhedged International Stocks): QTD 5.17% YTD 8.83%
  • MSCI Emerging Market (unhedged): QTD 5.05% YTD 7.45%
  • Bloomberg Barclays Global Aggregate Bond Hedged: QTD 0.98% YTD -1.52%
Market Thoughts - Don Cox

Let's discuss some of the reasons the markets are continuing to rise and how these factors should continue to help the expansion into next year. Reopening of businesses, the large amount of stimulus from the U.S. Government, and consumer spending are all broad factors that have been positive.

Many corporations have been buying back their stock and have announced $350 billion more in 2021. Another factor that helped push the stock market higher is investors added a net $722 billion to long term mutual and exchange traded funds in the first half of 2021, nearly doubling the prior record. Investors seem to have more confidence in the U.S. corporations and are saving more than ever.

For the housing market, U.S. home sales rose 22.9% from a year earlier in June. With the elevated price of materials, builders have virtually stopped building spec homes and will only build homes that are already sold. Fewer homes on the market to sell has driven up the price of homes and buyers are having to pay above asking price to buy a home.

In every market environment, we strongly believe in our diversified approach to money management, and our Axiom platform has performed very well in both up and down markets.

Inflation Ideas - Cody Cox

One of the biggest concerns among investors today is where inflation will go next. In order to get a better idea of where it might be heading, let's look at three measures of inflation expectations from consumers, economists, and the market. While each individual measure might have its own implications and meaning, the combination of the three can provide us some insight to where inflation might be headed.

Our first measure, consumer expectations, is at 2.8% which reflects the pricing pressures consumers face in their daily lives and tends to be the highest of these three measures. Unlike the previous measure, the professional forecasters' expectation include the components and complexities of the Consumer Price Index (CPI) . They anticipate 2.3% average CPI over the next 10 years. Since the forecasters anchor their expectations with monetary policy, this measure is remarkably stable compared to consumer or market expectations. The last and most volatile measure of the three is the 5 year 5 year forward inflation expectation. This measures the expected inflation rate on average over the five-year period that begins five years from today. While it has moved higher over the past year to 2.2%, this is not a pure inflation expectation because it is influenced by other technical factors within the TIPS and Treasuries markets.

Although there are many measures of inflation expectations, no one expectation alone can forecast the future. What we can see from these three measures is that none of them exceeded 3%. One could conclude that inflation might settle somewhere between 2-3% which is above the Fed inflation target of 2%. Although, based on these measures, consumers, economists, and the markets seem to agree that we’re not heading towards a sustained surge.

Sources: MFS Insights, FactSet, Federal Reserve Bank of Philadelphia, Federal Reserve Bank of St. Louis, University of Michigan, J.P. Morgan Asset Management. *Chart Data show the latest flash or final reading from the University of Michigan Survey of Consumers, latest daily 5yr/5yr forward inflation expectation rate, and the latest quarterly Survey of Professional Forecasters on a 1-month lag.

Total returns of the indices mentioned are provided by Morningstar, MSCI, S&P Dow Jones and SectorSPDR.com. None of these firms nor their Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the information on their websites, including, but not limited to information originated by them, licensed by them from information providers, or gathered by them from publicly available sources. There may be delays, omissions, or inaccuracies in the information. Past returns are no indication of future results.


Catch-Up Contributions

A recent survey found that only 23% of people were very confident about having enough money to live comfortably through their retirement years. At the same time, 33% were not confident.

Congress in 2001 passed a law that can help older workers make up for lost time. But few may understand how this generous offer can add up over time.

The “catch-up” provision allows workers who are over age 50 to make contributions to their qualified retirement plans in excess of the limits imposed on younger workers.

Contributions to a traditional 401(k) plan are limited to $19,500 in 2021. Those who are over age 50 – or who reach age 50 before the end of the year – may be eligible to set aside up to $26,000 in 2021.

Contributions to an IRA are limited to $6,000 and if you are over age 50 the limit is $7,000.

Setting aside an extra $1,000 or $6,500 each year into a tax-deferred retirement account has the potential to make a big difference in the eventual balance of the account. And by extension, in the eventual income the account may generate. Call us so we can show you how your personal situation can change by using catch-up contributions.

source: https://www.coxglobalassociates.com/resource-center/retirement/catch-up-contributions

Should You Borrow from Your 401(k)?

The average household with credit card debt had a balance of $15,983 in 2017, nearly eclipsing the peak of $16,900 in 2008.¹ With the average credit card annual percentage rate sitting at 14.9%, it represents an expensive way to fund spending.²

Which leads many individuals to ask, “Does it make sense to borrow from my 401(k) to pay off debt or to make a major purchase?”³

Benefits of a 401(k) Loan

  • No Credit Check—If you have trouble getting credit, borrowing from a 401(k) requires no credit check; so as long as your 401(k) permits loans, you should be able to borrow.
  • More Convenient—Borrowing from your 401(k) usually requires less paperwork and is quicker than the alternative.
  • Competitive Interest Rates—While the rate you pay depends upon the terms your 401(k) sets out, the rate is typically lower than the rate you will pay on personal loans or through a credit card. Plus, the interest you pay will be to yourself rather than to a finance company

Disadvantages of a 401(k) Loan

  • Opportunity Cost—The money you borrow will not benefit from the potentially higher returns of your 401(k) investments. Additionally, many people who take loans also stop contributing. This means the further loss of potential earnings and any matching contributions.
  • Risk of Job Loss—A 401(k) loan not paid is deemed a distribution, subject to income taxes and a 10% penalty tax if you are under age 59½. Should you switch jobs or get laid off, your 401(k) loan becomes immediately due. If you do not have the cash to pay the balance, it will have tax consequences.
  • Red Flag Alert—Borrowing from retirement savings to fund current expenditures could be a red flag. It may be a sign of overspending. You may save money by paying off your high-interest credit-card balances, but if these balances get run up again, you will have done yourself more harm.

We caution against borrowing from your 401(k), but a loan may be a more appropriate alternative to an outright distribution, if the funds are absolutely needed.

Sources: 1.) NerdWallet, 2017 American Household Credit Card Debt Study 2.) NerdWallet, 2017 American Household Credit Card Debt Study 3.) Distributions from 401(k) plans and most other employer-sponsored retirement plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 72, you must begin taking required minimum distributions.

stay informed


Every year, the government prints millions of notes a day. Here’s a quick look at what goes into creating a $20 bill and what determines when a bill’s lifespan ends.

A $20 bill starts out life as part of a large sheet of paper. While most paper is made primarily from wood pulp, the paper used by the U.S. Bureau of Engraving and Printing doesn’t contain any wood at all. Currency paper is composed of a special blend of 75% cotton and 25% linen. It’s made with special watermarks and has blue and red fibers embedded in it along with a special security thread.

Each blank sheet is tracked from the time it leaves the mill until it is printed, and the entire shipment is continuously reconciled to make certain all are accounted for.

These blank sheets of cotton and linen paper get printed four times. Background images and colors are printed — both sides at once — using offset presses that are over 50 feet long and weigh over 70 tons. After drying for 72 hours, the portraits, vignettes, scrollwork, numerals, and letters are printed on the back using Intaglio presses that are a mere 40 feet long and weigh only 50 tons. After drying for another 72 hours — in special guarded cages — more portraits, vignettes, scrollwork, numerals, and letters are printed on the front using the Intaglio presses. Finally, the serial numbers, Federal Reserve seal, Treasury Department seal, and Federal Reserve identification numbers are printed using a letterpress.

Once dry, these printed sheets are gathered in stacks of 100 to be cut by a specially designed guillotine cutter. Each new stack of 100 $20 bills is wrapped with a special paper band. Ten of these 100-note stacks are gathered, machine counted, and shrink-wrapped into a bundle. Then, four of these shrink-wrapped bundles are collated together, given a special barcode label, and shrink wrapped again to create a brick of 4,000 bills, worth $80,000.

The Treasury Department ships these newly printed $20 bills to the Federal Reserve Banks, who in turn pay them out to banks and savings and loans—primarily in exchange for old, worn-out bills. The new bills are handed out to customers of these institutions as they withdraw cash, either through tellers or through automated teller machines.7

An average $20 bill will change hands often, but even the U.S. Bureau of Engraving and Printing isn’t sure how many times a bill will move from one pocket to the next. Contrary to popular belief, the government doesn’t have any way to track individual bills.

There is a polyester security thread embedded in the paper that runs vertically up one side of each bill. If you look closely, the initials USA TWENTY along with the bill’s denomination and a small flag are visible along the thread from both sides of the bill. This thread makes currency more difficult to counterfeit, but cannot be tracked electronically.

Banks gather worn out and damaged currency, sending it to the Federal Reserve in exchange for new bills. The Federal Reserve then sorts through these bills to determine which are still usable and which are not. Those bills deemed usable are stored until they can go out again through the commercial banking system. Those deemed no longer usable are cut into confetti-like shreds. Most are then disposed of; a small portion is sold in five-pound bags through the Treasury’s website.

Sources: 1.) Federal Reserve, 2019 2.) Bureau of Engraving and Printing, 2019


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Cox Global Associates, Inc. || 1260 Pin Oak Road, Suite 204 || Katy, TX 77494 || 281.395.8300 https://www.coxglobalassociates.com/ || info@coxglobalassociates.com

Securities and Advisory Services are offered through Geneos Wealth Management, Inc. FINRA, SIPC. Investment advisory services also offered through Cox Global Associates, Inc., A Registered Investment Advisor.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. Articles may be developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.