Long Yen denominated Financials/Short Euro based banks

The action in the big name financials, both US and European, continue to suggest a very liquid capital markets and equity environment. From C, BAC, GS, JPM and the insurers AIG, BRKA, MET, PRU to the European banks and insurers (such as AZ, AXA, ING and STD, RBS, Barclays, and DB; some takeover related). The exceptions are the Japanese financials (such as NMR, MTG, MTU), which may be dancing to different drummer, though their spectacular rise since the 2003 lows should be noted. But should they dance to different drummer given how earlyu in the tightening cycle they are relative to the US and Europe? While the 80's and Nineties exhibited little correlation between the US and Japanese markets (or Europe and Japan for that matter), things may be a bit different now given the freer capital movement, especially from Japan, and the correlated advance since 2003. While Japan has often been accused of lesser transparency, it seems to me the US financial conglomerates warrant some additional scrutiny, given recent history of the insurers, GSE's and stock option issues, and the magnitude of the unquantifiable hedge fund and derivative risks. One shouldn't get too get carried away with any bearish prognostications, though, its hard not to convey some caution. It's obvious that the latest broad based US market and sectoral advance, has come courtesy of a weaker dollar and is almost exclusively attributable to expected lower Fed Funds and a drop in long-term and intermediate term intermediate rates in the US. The only sensible way to play this is arbitraging between the US/EU and Japanese Financial institutions (favoring the latter). Now in fact, its the more extremely valued Euro and Pound based financials that warrant caution for unhedged investors.