This week, not unlike weeks prior, will be primarily about what kind of news comes out of the U.S. The good news is that major financial players have finished announcing earnings. The bad news is subprime-related problems were much bigger than anyone believed, or at least was willing to acknowledge. The question is for how much longer will “subprime” be a drag on earnings and how far/deep will the impact spread (autos, consumer electronics, etc).

Last week Nomura Holdings (ADR: NMR) (JP: 8604) announced it is exiting the mortgage-backed securities business in the U.S. and reported hundreds of millions of dollars of losses that are going to make things ugly for Q2 earnings. We also saw Sanyo (ADR: SANYY.PK) (JP: 6764) calling off plans to sell its semiconductor division after Advantage Partners was unable to come up with the financing. It appears a majority of the M&A activity over the near-term will be between companies.

The story later in the week will be domestic earnings with Honda, Nissan and Sony among the big names announcing. Renewed yen strength could possibly limit any rallies from positive earnings surprises. There’s also the issue of $90 oil and higher commodity prices across the board weighing on both corporate earning and margins, as well as investors’ sentiment.

Nikkei 225 futures trading in Chicago took a beating, dropping 535 points or 3.15%, to 16,460. The drop was not unique to Japan in case you were off Friday, as it was the 20th anniversary of Black Friday and U.S. benchmarks felt compelled to relive some of the drama, with the Dow Jones Industrials, S&P 500 and Nasdaq all dropping about 2.6%. It seems tech stocks have the best potential for a rebound this week with important earnings releases coming from Apple (AAPL) and Microsoft (MSFT) and overall solid reports so far from key companies such as Google (GOOG), Intel (INTC) and Yahoo (YHOO).

As of Friday’s close (16,814.37), the Nikkei 225 is trading at 17.5x forward earnings, 18.6x trailing earnings, 1.86x book, with trailing and forward yields hovering above 1%.