Nvidia’s Record $46.7B Quarter, Trump’s 50% Tariff on India & Can Tax Credits Bring Hollywood Back?

Summary

Prof G Markets – Episode Summary

Date: August 28, 2025
Host: Ed Elson
Guests: Gil Luria (DA Davidson), Raymond Vickery (CSIS)
Episode Title Highlights: Nvidia’s Record $46.7B Quarter, Trump’s 50% Tariff on India & Can Tax Credits Bring Hollywood Back?

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Overview

In this episode, Prof G Markets delves into three major stories shaping global markets this week: Nvidia’s blockbuster earnings and the nuances behind its China strategy, the Trump administration’s steep new tariffs on Indian imports and the resulting geopolitical reverberations, and whether California’s Hollywood tax credits can really engineer a comeback for US film and TV production. Guest experts Gil Luria and Raymond Vickery provide candid analysis, while the hosts underscore the deeper implications for capital markets, industries, and international relations.

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Segment 1: Nvidia’s Record-Breaking Earnings—But Red Flags on China

[01:20–14:36]

Key Discussion Points

• Nvidia’s Blowout Quarter

  • Nvidia posted a record $46.7B in revenue (up 56% YoY); data center revenue alone hit $41.1B.
  • Net income surged 59% to $26.4B—all on a quarterly basis.

• Wall Street Response: Stock Decline on ‘Sky-High’ Expectations

  • Despite remarkable growth, Nvidia’s stock dropped as much as 4% in after-hours trading.
  • The quarter’s guidance ($54B revenue) was slightly below expectations, as some analysts had (wrongly) assumed continued revenue from China sales.

• The H20 Chip and the ‘China Debacle’

  • Confusion swirls as US policy wavers on allowing Nvidia to sell its ‘degraded’ H20 chip to China, with 15% government levies and new tracking requirements.
  • China balked at US-mandated chip trackers, halting purchases and prompting ongoing negotiations.

Insights and Quotes

• On why the stock dropped:

  • “Sky-high expectations are often Nvidia’s downfall. … The guidance was a little light, mainly because China sales were excluded from the forecast.”
    (Ed Elson, 02:50, paraphrased)

  • “The guidance of $54 billion was slightly less than expected because some investors included China revenue in their forecasts. … The forecast doesn’t include any H20 sales to China, but if they can get approval, that could add $2 to $5 billion more.”
    (Gil Luria, 03:48)

• On the shifting China policy:

  • “It’s a degraded chip they were able to sell into China for a while. … Then the government told them, no, you can’t sell it into China. … Then [Nvidia CEO] Jensen Huang went to the White House and the President told him he can sell it into China. … Now, China [has frozen] those sales because it feels like those trackers represent a back door into their data centers.”
    (Gil Luria, 05:25–07:29)

• Importance of the China market:

  • “The Chinese market probably represents a quarter of the global market. … That determines a lot of money.”
    (Gil Luria, 05:25; Ed Elson, 07:29)

• Lingering uncertainty:

  • “What we heard is: there were no H20 sales to China in the July quarter. … Guidance for the next quarter does not include any H20s sold into China, but they believe they may be able to sell $2–5 billion worth if conditions change.”
    (Gil Luria, 08:20)

• Macro risks for Nvidia:

  • “Outside of China, the bigger concern is that there will be other bottlenecks—specifically, not being able to build data centers fast enough, or not having enough electricity output to power those centers. … The other set of concerns is if, for some reason, the progress of AI models hits a wall and demand slows, which does not appear likely right now.”
    (Gil Luria, 12:05)

Memorable Moment

• “You can’t bring a corpse back to life with a tax break.”
  (Ed Elson, previewing the Hollywood segment, 29:00s)

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Segment 2: Trump’s 50% Tariff on India—Reckoning for Global Trade

[17:15–29:26]

Key Discussion Points

• The Tariff Escalation

  • The US has doubled tariffs on Indian imports to 50%, aiming to punish India for buying Russian oil—ostensibly a move to curb Russian war funding.

• Economic Impact

  • US is India’s #1 trading partner; tariffs could erase a percentage point from India’s GDP and put 2 million Indian jobs at risk.
  • Broad consensus: this hits India much harder than the US, damaging a critical bilateral relationship.

• Historical Context and Geopolitical Fallout

  • Interview with Raymond Vickery (former US Assistant Secretary of Commerce, India expert):
    • The US and India had been overcoming an “estrangement” going back decades; this move throws it “into doubt and disarray.”
    • India’s historical suspicion of reliance on foreign partners resurfaces, empowering protectionist voices.

Insights and Quotes

• On the geopolitical mistake:

  • “With one stroke, much of what we have done has been thrown into doubt and to disarray. This is a very unfortunate development, not only from an economic but from a strategic point of view.”
    (Raymond Vickery, 19:06)

• Why target India, not others?

  • “Why do I think Trump has chosen India as this means of punishing Russia? … I don’t really think it’s about Russia so much as it is about President Trump and his egomania as the center of … world decision making.”
    (Raymond Vickery, 24:39)

  • “India is a relatively soft target as opposed to China. … The transactional, chaos-creating approach works better with India than China.”
    (Raymond Vickery, 27:40)

• On Indian retaliation and US leverage:

  • Tariffs risk hardening India’s historic “self-reliance” (Swadeshi) posture; protectionist policies could gain traction after feeling “burned” by America.
  • “We’re basically sending every other nation into each other’s arms. … Deals are happening. They’re just not involving us.”
    (Ed Elson, 29:26)

Memorable Moment

• “You’re affecting vast numbers of people. … And you’re affecting areas most important to the United States—manufacturing, supply chains, parts. Those get hurt even more.”
  (Raymond Vickery, 27:40)

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Segment 3: Can Tax Credits Bring Hollywood Back?

[29:26–End]

Key Discussion Points

• The California Tax Credit Surge

  • Recap: California approved $750 million in film/TV tax credits, hailed as “historic.”
  • Result: 22 new TV shows approved, 6,500 jobs, $1B in spending forecast.

• Reality Check: The Scale Problem

  • US produced 1,200 shows last year; 22 is a small dent compared to job losses (18,000 lost in two years).
  • $1B is barely more than what MrBeast is projected to spend on YouTube content in 2025—and less than what Netflix spends on content every three weeks.

• Structural Not Cyclical Decline

  • Hard truth: Hollywood’s erosion is driven by global labor arbitrage and digital-first content creators, not just temporary factors; competition from Europe and beyond is fierce.
  • Example: In LA, one “grip” (technical crew) costs $53k; in Budapest, Hungary, six grips cost $51k.

Insights and Quotes

• On scale and (false) comeback narrative:

  • “Hollywood is back—or at least it’s back, according to the state of California. … You got 22 new TV shows, sounds good, until you compare it to the 1,200 TV shows that were produced in America in 2024.”
    (Ed Elson, 29:26)

• On the tax credit’s limits:

  • “You can’t bring a corpse back to life with a tax break. … Hollywood is dying, and you can appreciate the efforts … but you have to move on to other things.”
    (Ed Elson, 32:34)

• On the true state of production:

  • “Production in LA is down by a third. The average unemployment rate in film and TV right now is 11%. It has doubled in the past two years.”
    (Ed Elson, 31:45)

• Where the entertainment industry is going:

  • “It’s happening in front of an iPhone camera attached to a tripod. It’s happening in front of a webcam, on a livestream. We are beyond incentives at this point. We’re beyond tax breaks. The future has arrived.”
    (Ed Elson, 32:53)

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Takeaways & Themes

• Markets and Tech:
  Nvidia’s growth story continues, but geopolitical risk and physical infrastructure constraints now rival tech innovation as the main determinants for its future trajectory.

• Trade Geopolitics:
  The Trump tariffs on India mark a radical break with decades of engagement—and risk pushing India closer to Russia, China, and BRICS, isolating the US.

• Structural Industry Change:
  Efforts to revive Hollywood are likely futile against the dual pressures of cheaper overseas labor and the inexorable shift to digital, creator-driven media.

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Notable Quotes (with Timestamps)

• “Sky-high expectations are often Nvidia’s downfall.”
  —Ed Elson, [02:50]

• “It’s a degraded chip they were able to sell into China for a while… Now, China [has frozen] those sales because it feels like those trackers represent a back door into their data centers.”
  —Gil Luria, [05:25–07:29]

• “The only thing that can really slow down Nvidia outside of China is if we are not able to build the warm data centers fast enough to put those chips in.”
  —Gil Luria, [12:10]

• “With one stroke, much of what we have done has been thrown into doubt and to disarray. This is a very unfortunate development… thrown it all into reverse and is quite detrimental to the relationship.”
  —Raymond Vickery, [19:06–23:53]

• “You can’t bring a corpse back to life with a tax break.”
  —Ed Elson, [32:34]

• “The future has arrived.”
  —Ed Elson, [32:53]

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Important Timestamps

• Nvidia Earnings & China Policy: [01:20–14:36]
• Trump’s India Tariffs – Expert Analysis: [17:15–29:24]
• Hollywood Tax Credits Reality Check: [29:26–end]

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Tone:
Candid, data-driven, occasionally sardonic—strong on expert insight, skeptical of easy fixes, and steeped in market realism.

Transcript

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[Gil Luria]

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[Gil Luria]

The show goes on.

[Ed Elson]

Welcome to Prof. G Markets. I'm Ed elson. It is August 28th. Let's check in on yesterday's market vitals. The three major indices rose throughout the day ahead of Nvidia's earnings. We will get to that in a second. The S and P closed at a fresh record. Short term treasury yields extended their decline as bets on rate cuts strengthened. And finally, crude prices climbed after the US Slapped punitive tariffs on India for purchasing Russian oil. More on that later. Okay, what's happening? The world's most valuable company reported second quarter earnings that beat expectations on the top and bottom lines and set a fresh record for sales. Nvidia's overall revenue rose 56% to $46.7 billion. Net income was up 59%. Datacenter revenue also rose 56% from a year ago but that was slightly below what what analysts were expecting. As we know on this show, sky high expectations are often Nvidia's downfall. And the stock did indeed fall as much as 4% in after hours trading on that narrow miss. We'll see how it trades throughout the day. So joining us now to break down these earnings, we have Gil Luria, head of technology research at DA Davidson. Gil, great to have you on the podcast. Thank you for joining me.

[Gil Luria]

Thanks for having me.

[Ed Elson]

So let's get into these Nvidia earnings. Biggest day of the year. Biggest day of the quarter, I should say, just looking at this revenue here, $46.7 billion, up 56%. $41.1 billion in data center revenue, up 56%, $26.4 billion in net income. Remember, this is all on a quarterly basis, up 59%. And yet the stock fell in after hours. Make that make sense to me?

[Gil Luria]

Yeah. So first, happy Nvidia day. It is the biggest day of the quarter. The guidance of 54 billion was slightly less than expected because some investors, some estimates had included China revenue in their forecast when the company made it clear that this revenue forecast, this estimate does not include at least any H20 sales. And so that number looks a little light. But again, considering they said if we can sell H20s, if we get the licenses and the customers and the government tells us how much taxes we have to pay, we could actually do 2 to 5 billion dollars more. So in that sense, it's a fine forecast. Again, slightly less than the higher expectations, but it's an okay forecast.

[Ed Elson]

So this, this H20 China debacle, and we should probably clarify what that means. So this H20 chip, which was designed for China, that was basically Nvidia's China chip that was supposed to be sold to China. And then Trump comes in and says, no, you're not allowed to sell that to China anymore. Then he reverses that decision and says, you can sell it, but you got to pay 15% to the government. And now I'm hearing that they're not allowed to sell those H20 chips anymore or they're discontinuing that. There's a lot of confusion here with this H20 China situation. What is going on there and how important is it to Nvidia?

[Gil Luria]

Yeah, the Chinese market probably represents a quarter of the global market, something along those lines. Probably a quarter of Nvidia's revenues. In total, they report slightly less. But there's some indirect sales into China. And H20 is the chip thing. Were able to sell It's a degraded chip that they were able to sell into China for a while. And then at some point the government in around April told them, no, you can't sell it into China. Then Jensen Huang went to the White House and the President told him he can sell it into China. So you brought us mostly up to speed on the plot. There's another part of the plot which is this is again a national security issue. Nvidia, the government believes and has some convicted felons that have smuggled Nvidia servers into China and therefore asked Nvidia to start tracking servers so they don't get sold into China by the resellers. Hopefully you're keeping. We're still.

[Ed Elson]

And this is the US Government saying yes. Okay.

[Gil Luria]

The US Government asked Nvidia to put trackers on their chips.

[Ed Elson]

So.

[Gil Luria]

So nobody can smuggle the most advanced chips into China. China felt strongly that that's offensive to them. They don't want trackers in any of the servers. They feel like that's us having a back door into their compute. And therefore told some of its entities not to buy H20s. And here we are. Today, the US is allowing Nvidia to sell H20s. It will charge them a 15% tax to do so, but China has frozen those sales because it feels like those trackers represent backdoor into their data centers. So the US and China have to figure this out. Jensen Huang is shuttling between to try to reconcile those differences. And for now, Nvidia can sell H20 chips not into China, which it did in the July quarter, but isn't selling into China yet. Hopefully that all makes sense.

[Ed Elson]

It does all make sense. It's certainly confusing, but all of that is determining. What you just described is a quarter of the business. I've seen other estimates. I think I've seen lower numbers than that. Sounds like maybe there is some murkiness on how big the China market actually is for Nvidia. But be that as it may, we're describing a lot of money here and that's a lot of confusion. That determines a lot of money. So did this earnings call clarify anything about China? Did we learn if the H20 chips are going to be sold? Is that included in the guidance? Did they remove it from the guidance? I've heard that they're working on a new chip that might work for China. Did Jensen clarify anything for us on this call?

[Gil Luria]

What we heard is that there were no sales of H20 chips to China in the July quarter. Yeah, there were sales of H20 chips not into China in the July quarter. For the August quarter, they said we're not including any sales of H20 chips into China for this quarter, the October quarter. So our forecast of Our guidance of $54 billion plus or 2, plus or minus 2% does not include any H20s sailed into China, although we believe we may be able to sell H20s into China in the quarter, as much as 2 to 5 billion dollars. That's where we're at. On a parallel path. We are now trying to convert. Remember, H20, that's Hopper chips. That's two years ago, old news. Now we're working on Blackwell chips.

[Ed Elson]

Right.

[Gil Luria]

The current generation is in fact the Blackwell Ultra. So Nvidia is working on degrading Blackwell chips to a point where they can sell those into China, but the government hasn't even made it clear to them. The US government hasn't made it clear to them how far they need to degrade it in order to get those approved. So that's a parallel path that probably isn't relevant for October quarter, but is relevant for the January quarter as we look ahead into what is pretty a good high expectation for the January quarter as well. So that's what we heard. That's how far we've gotten in terms of the commentary. The company didn't give that much more detail on the call, but we know all those things.

[Ed Elson]

Were you surprised at all by the market's reaction? We'll see how it trades throughout the day. Maybe it'll rip back up throughout the day, but falling as much as 4% after hours, that's pretty significant. I'm wondering if you are surprised by that move at all. Do you think that that's warranted?

[Gil Luria]

Not surprised at all. The stock has been up very considerably this year and especially since those lows in that April, May time frame and. Right. And again, expectations walking in where they would be able to guide to more 55 billion, maybe 55 and a half billion for the next quarter. So the fact they got into 54 plus some option on China, it was a little less than expected. So it makes sense for the stock to pull back a little bit.

[Ed Elson]

Yeah.

[Gil Luria]

Stepping back, the valuation is, is reasonable. It's. It's at the same level that it's been in the past when the company was growing 20, 25%, which is probably what we're looking at for next year. So the fact that it was a full valuation didn't got quite as high as investors expected. That explains the pullback.

[Ed Elson]

Yes. It seems as if the market basically is looking for any reason to bring it down. I mean, they are scrutinizing these earnings, and anything that even seems remotely shaky is an excuse to bring it down just a little bit. But having said that, we are at. What are we at? $4.4 trillion, the most valuable company in history, the first company to hit a $4 trillion market cap, and as you say, not a crazy valuation, given the growth and given the financials that we're seeing. What are the macro concerns, though, for Nvidia, when we see these little dips? If we had to put ourselves in the shoes of someone who decided to sell after they saw those earnings, what are some of the reasons that people might be pulling back from Nvidia? What are the major concerns about this stock?

[Gil Luria]

Yeah, so we've talked about China at length. That's going to add a lot of variability. But the bigger concern is that there will be other bottlenecks that limit Nvidia's ability to grow. Meaning a chip can only go into a data center. When the data center is built, hooked up to electricity and has its H Vac installed, we are having a harder and harder time, especially in the US Finding spots that we can build next to an electricity output, sufficient electricity output. And then we're having difficulty building those data centers and installing H Vac because that requires a lot of people that have been very busy for the last two years. So the only thing that can really slow down Nvidia outside of China is if we are not able to build the warm data centers fast enough to put those chips in. The other set of concerns has to do with the progress of AI, which is models have made remarkable progress in the last two years, in the last year, in the last six months, and they've gotten so capable that we are all using them a lot more, and we're using them to an extent. That inference demand is growing very rapidly, which is driving the data center demand, which is driving hyperscalers to buy more chips, which are driving other companies now that are not hyperscalers to buy more chips. As long as the model continue to be helpful to us, that will continue. But if at any point it hits a wall and consumers stop using and adopting the models for their everyday use and trying to use them at work, if that was ever to slow down, we could see a slowdown in demand. Having said that, as we sit here today, that doesn't look to be the case anytime soon. We are all using AI models for more and more of our personal lives and increasingly our professional lives. So that demand looks to grow, but that would be the other place where the Nvidia story could get derailed.

[Ed Elson]

Yeah, definitely. We're definitely scraping the barrel there for concerns, but it's helpful to know that we appreciate your time, Gil. Happy Nvidia day to you. And I will just say we love having you on because you somehow make chips and graphics processing units not boring and also simple to understand to an extent. So we really appreciate your time.

[Gil Luria]

Thank you.

[Ed Elson]

That was Gil Luria, head of Technology Research at DA Davidson Media. Stock initially fell, but we will of course be watching this throughout the day. We'll see what happens after the break. Trump escalates trade tensions with India and if you're enjoying the show so far, give Property market to follow. Wherever you get your podcasts.

[Gil Luria]

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[Ed Elson]

We're back with Prof. G markets. The US has officially doubled tariffs on India imports up to 50%, one of the sharpest trade escalations in recent history. The White House says that the move is designed to punish India for buying Russian oil. They are concerned about what those oil purchases are doing to aid Russia in their war on Ukraine. So it's not just an economic move. It is really a geopolitical move. But make no mistake, this will be economically very painful for India. America is India's largest trading partner. We buy $87 billion worth of goods from India per year. That is more than a third of India's total exports. And so, according to estimates, you slap on an extra 25% tariff on top of the 25% that we already had in place, remember, for India, and you are looking at erasing a full percentage point of GDP growth for the Indian economy. You are also likely putting 2 million jobs at risk in India. So this is a big deal. Maybe not as much of a big deal for America, but certainly for India. And it's also a big deal in terms of our relationship with India, which we have worked very hard on throughout history. And now it appears we are essentially leaving it behind or at the very least damaging it. But let's get an expert on to break this down for us. Our producer, Claire, spoke with Raymond Vickery, who is really the perfect person to tell us what this all means. Raymond is a former member of the Clinton administration. He was the US Assistant Secretary of Commerce for Trade Development. He focused specifically on India when he was in the administration. And he is now a senior associate at the center for Strategic and International Studies.

[Raymond Vickery]

I think that this is a huge mistake on the part of the Trump administration. You know, for the past 30 years, we've worked very, very hard to overcome the estrangement which had existed between these two largest democracies in the world. And with one stroke, much of what we have done has been thrown into doubt and to disarray. So this is a very unfortunate development, not only from an economic but from a strategic point of view. These two democracies have made progress both in terms of economic engagement and strategic engagement based on trust. And this approach of putting really the highest tariff rate from The US and the world on India, supposed partner in so many areas is extremely difficult for us to rectify in a short run and is completely the wrong approach.

[Producer Claire Miller]

You called it an estrangement. Could you give us some more historical context on our trade relationship with India and where that estrangement came from?

[Raymond Vickery]

Basically you can put U. S India relations into three large baskets. One was the time of independence from 47 till the late 60s if you will, when India had very really limited economic and strategic relations with the US because they were coming out of a colonial period and had such rampant poverty. About the late 60s, early 70s, the relationship got worse because there was a feeling that India had sided with the Soviet Union in the Cold War. In the early 1990s the US and India entered a period of reconciliation. India had almost gone broke because really of its top down license raj socialist approach to the economy. The collapse of the Soviet Union deprived it of cheap arms and some of the trade which had occurred there as well as strategically. So India was in need of new partners. It opened up to the west, former colonial powers and to the United States and even under Trump won the first administration. That process basically continued. They had a very good Republican ambassador Ken Juster to India and it went forward. The Biden administration was all in and there was progress not only on the high tech side, but just in ordinary trade matters. The movement of people under H1B visas, the trade in information technology assisted services flourished. And now what has happened of course is all that has been thrown into reverse. There is no justification for the first 25% that was announced and then of course exacerbated by this sledgehammer approach to India on oil for Russia. It is true that India should do more in regard to world peace, whether it be the invasion of Ukraine or indeed what happens with China. But taking this sledgehammer approach, particularly when you don't do the same thing with the leading oil buyer China, you don't really put. Put pressure on Western Europe in regard to natural gas, is deemed by the Indians, of course, gross hypocrisy and is counterproductive to what the United States should be trying to achieve, which is a closer relationship between the U.S. india, whether it be having to do with the Russian invasion of Ukraine or terrorism from Pakistan, so many areas, it's thrown it all into reverse and is quite detrimental to the relationship.

[Producer Claire Miller]

As you mentioned there, it's many analysts are saying that Trump is really just using this punitive tariff as a way to get to Putin. And I guess my question would be as as you said, he's not doing the same to China. So why do you think Trump has chosen India as this means of punishing Russia?

[Raymond Vickery]

Well, I hate to say it, but I don't really think it's about Russia so much as it is about President Trump and his egomania as being the center of not only national but world decision making. I think the Indians infuriated President Trump when he claimed to have solved hostilities between Pakistan and India, which were a reaction to terrorist attack up in Kashmir. India refused to give him credit for bringing about any kind of peace. On the other hand, with Pakistan, the Pakistan authorities said, yes, President Trump had caused cessation of hostilities and restoration of relatively peaceful relations and even nominated him for a Nobel Peace Prize. So President Trump, I don't think, took that kindly.

[Producer Claire Miller]

Could we see India retaliate with tariffs on the US or does India risk too much by escalating?

[Raymond Vickery]

Well, I think India is going to have its tendencies toward protectionism exacerbated. For years and years, we've tried to bring India into a world trading system which recognizes the advantages of having goods and services move across national borders. This was not the orientation of India to start with, with Nehru and the whole Swadeshi, which means self reliance movement, has been a strong element of Indian politics from the very first. And so what this does is play right into that protectionist view and it gives domestic political strength to those who say, yeah, we told you so. India can't rely on anybody but itself and those people who will sell it whatever it wants without any restrictions on the arms side. That's one of the, one of the very bad consequences of this.

[Producer Claire Miller]

When you look at the economic consequence, I'm seeing forecasts that if these tariffs hold, it could knock off a percentage of GDP for India. Do you think that that is a fair assessment? And really just what does that say about how important America is to India's economy?

[Raymond Vickery]

Yes, I think that it is significant. And when you're talking about 1.4 billion people and you knock off a percentage even in growth, you're affecting vast numbers of people. And you're affecting people really in areas which are most important to the United States. Cooperation in regard to manufacturing into supply chains, into parts, those things for automobiles and trucks, those are the things which get hurt even more, rather than, if you will, the agricultural economy which sustains so many people. So it's very significant, and it's a lot more significant to India than it is to the United States. And that's one of the reasons I think that President Trump and his advisors, Peter Navarro and so forth, are picking on India because India is a relatively soft target as opposed to China. And so the approach of the transactional, you know, make a very large demand to create chaos and fear works better with India than it does with China and does others. So I think that's. That's an aspect of it, but it's serious.

[Producer Claire Miller]

That's a great point. I'm glad you made it. Thank you so much for doing this, Raymond. I really appreciate your time.

[Raymond Vickery]

Okay, thank you for having me.

[Ed Elson]

That was Raymond Vickery, senior associate at the center for Strategic and International Studies. So, several months ago, Scott and I discussed what the net effect of this tariff policy would be. And our conclusion was that we would see a lot of deals, a lot of deals would get done. They just wouldn't really involve us. We're basically sending every other nation into each other's arms. We are rerouting all of these trade partnerships throughout the world, reestablishing these geopolitical alliances for everyone else, but not for us. And it does appear that that is exactly what is happening here with India. It appears that that is what is happening with the fastest growing economy in the world. They're getting cozy with basically everyone else. They're getting cozy with Russia. Modi is chatting with Putin. He's just called Putin his friend. And they've now agreed to up their trade by 50% to $100 billion. He's been on this BRICS tour. Last month, he was hanging out in Brazil. He was also hanging out with the President of South Africa. And what is on Prime Minister Modi's agenda for next week? He's off to visit Xi Jinping in China. So, yes, Beijing and New Delhi, China and India, they are now patching up their relationship up. It's new as of this year. And by the way, this visit to China that is going to happen next week, that will be Prime Minister Modi's first visit to China in seven years. So, yeah, deals are happening. They're just not involving us. You might remember a few months ago when California approved a 700, $150 million tax subsidy to support Hollywood. This was all part of the film and television tax credit program. It was essentially designed to bring Hollywood back to life. Well, we have an update. As of yesterday morning, according to the California state government, 22 new TV shows have been approved for production in the state of California. And those shows have will benefit from the tax breaks. According to the California state press release, the expansion of the program is quote Historic. And it will generate roughly $1 billion in wages and spending across the Golden State. Applications for subsidies have risen 400% from last year, and all eligible shows were approved. So Hollywood is back, or at least it's back. According to the state of California. 22 new TV shows, a billion dollars in spending across the state, six and a half thousand jobs. It sounds pretty good. You know, maybe this isn't the end of Hollywood, but as we like to do at Prof. G, let's just put those numbers into perspective for a moment. So you've got 22 new TV shows. Sounds good. And then you compare it to the 1200 TV shows that were produced in America in 2024. Okay? You got six and a half thousand new jobs, which sounds like a big deal, okay. Until you realize that the amount of jobs that LA is losing, it's been roughly 18,000 in just the past two years alone. So, you know, production isn't really back here. They're basically just clawing back a third of the losses that have happened over the past two years. And then you have that $1 billion number which the press release appears very proud of. Again, maybe it sounds good, a billion dollars. But then you just compare it to how much is being spent and made, not in the Hollywood economy, but in the digital economy, in the world of TikTok and Instagram and YouTube. In fact, $1 billion is only a little bit more than the amount of money MrBeast is projected to spend on his YouTube videos in 2025. It's also the amount that Netflix spends on content every three weeks. So meanwhile, in addition to what digital media is doing to Hollywood, it's doing a number on it. You've also got this international competition that's happening too. It costs $53,000 to hire one grip in Los Angeles, California. In Budapest, Hungary, you can hire six grips for 51,000. And by the way, that is why Netflix now spends the majority of its content budget abroad. It's also why America has dropped to number four in the world rankings for film and TV production activity. So, you know, no, this isn't a big deal. This isn't historic. And I'm sorry to say it, but Hollywood isn't back. Maybe the tax breaks will get you a couple extra Hulu shoots in Burbank, but the damage has already been done. Production in LA is down by a third. The average unemployment rate in film and TV right now is 11%. It has doubled in the past two years. So what you're dealing with here is the decline of an industry that is structural, it's not cyclical, and you're not going to fix it with tax incentives. Hollywood is dying, and you can appreciate the efforts that the California government is trying to make here. But you can't bring a corpse back to life with a tax break. You've got to move on to other things. You've got to recognize that the entertainment industry isn't happening on the production set anymore. It's happening in people's homes, in people's living rooms. It's happening in front of an iPhone camera attached to a tripod. It's happening in front of a webcam, on a live stream. We are beyond incentives at this point. We're beyond tax breaks. The future has arrived. So we appreciate the effort, California. And yes, we all miss Hollywood. Who doesn't love a classic movie? It was fun while it lasted. But let's be real with ourselves. Hollywood is not back. And no number of press releases from the California state government is gonna change our opinion on that. Okay, that's it for today. This episode was produced by Claire Miller, edited by Joel Patterson and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our research team is Dan Shalon, Laura Jana, Isabella Kinsel, and Mia Saverio. Thanks for listening to Prof. G Markets. I'm Ed Elson. Join us tomorrow for our conversation with Mark Zandi, chief economist at Moody's Analytics.