‘The Big Short’ Greg Lippmann Warns of Potential Impending Doom Despite Goldilocks Consensus [Q3 Letter]

During the third quarter, Greg Lippmann’s LibreMax Partners posted a return of 1.91%, bringing its year-to-date performance to 6.59%. Since its inception, the firm has posted an annualized return of 6.67%. LibreMax had about $12.4 billion in assets under management at the end of September.

Lippmann’s short of subordinated tranches of residential mortgage-backed securities at the beginning of the Global Financial Crisis was chronicled in The Big Short.

Sigh of relief amid easing

In his Q3 2025 letter to investors, which was obtained by Hedge Fund Alpha noted that the market focus switched from tariffs and geopolitics to the positives typically associated with the beginning of easing by the Federal Reserve.

Also see: This Ancient Hedge Fund Is Up 54% YTD With Gains On Gold And Silver Bets

August brought weaker labor numbers, which helped soothe the market with expectations of the Fed’s first rate cut of 2025. Those August numbers also made the market optimistic around further easing before the end of the year.

According to Lippmann, investors generally saw the rate cut as a proactive move by the Fed to support growth instead of a reaction to weakness. This nuance has previously provided support for stock indexes. The markets reached a major crossroads during the third quarter as inflation moderated while company earnings remained resilient and investments around artificial intelligence drove a wider rally across both the equity and credit markets. Consumer spending displayed stability while credit performance remained solid, boosting sentiment even more.