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Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

Japan's Sprinting Stock Market Stumbles Over Earnings Worries [Wall Street Journal]

Summary: Japanese stocks are starting to lose their luster after surging 40+% last year. It's not that earnings have been disappointing to-date, but investors are becoming concerned about full-year profits. Goldman Sachs' research shows Japanese stocks have turned in average first-half earnings of 11.7%, versus expectations of 5.2%, and sales growth of 9.8%, versus 8.5%. However, investors, especially foreigners are skeptical of Japanese consumer spending and a possible slowdown in the U.S. economy, and thus are critical of full-year downward revisions of earnings. Even the Cabinet Office downgraded its assessment of the economy for first time in nearly two years, citing "some weakness in consumption." In contrast, the Japan bulls are still out there and point to sustained earnings growth and increasing dividend and M&A activity. iShares-Japan-EWJ-1yr-chart-11-22-06
Related links: Media coverage: Reuters. Commentary: Predicting a Strong Year-end Finish for Japanese EquitiesWeak Yen to Persist, BoJ Not Seen Hiking Rates Until Q1'07Nomura's Individual Investor Survey for NovemberSluggish Consumer Spending Dampens Japan's Economic Expansion.
Potentially impacted stocks and ETFs: ETFs: iShares MSCI Japan Index (NYSEARCA:EWJ), iShares S&P/Topix 150 (NYSEARCA:ITF), Vanguard Pacific Stock (NYSEARCA:VPL) • CEFs: Japan Equity Fund (NYSE:JEQ), Japan Smaller Cap Fund (NYSE:JOF)

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Source: What Happened to the Bull Market in Japan?