Recap of CNBC's Fast Money, Thursday August 7.

The Financials - American International Group (AIG), Citigroup (C), Bank of America (BAC), UBS (UBS), BB&T (BBT), Merrill Lynch (MER), Capital One (COF)

Traders started the commentary with American International Group which disappointed for the third time in a row and it was not alone today. Dylan Ratigan said that Citigroup was down nearly 6% today and is having auction-rate security issues as does Bank of America. Karen Finerman said that after Citibank settled on the auction rate securities issue, she believes the other banks must do the same. She said that UBS “has some liabilities,” and she is short BB&T. She noted that BB&T does not have auction rate securities, but it does have commercial and construction loans. Guy Adami said that he thought today would be “AIG specific,” but the Andrew Cuomo thing was a game changer. He said today was a “horrible day for Merrill Lynch.” Macke said, “I do not want to own them yet,” and that the Cuomo news is “horrible for the banks.” He said that it is too late to short, but to “buy the panics.” Finerman suggested going with Capital One. Najarian’s most compelling trade of the moment was Capital One. Najarian's bottom line: “Sell the rips and buy the dips.”

Retailer Retreat - Wal-Mart (WMT), Abercrombie & Fitch (ANF), Target (TGT)

Wal-Mart disappointed with a dismal report dropping more than analysts expected as did Target. Joe Terranova said that retail sales were “awful.” Jeff Macke chimed in that today there were “plenty of reasons to sell, not a lot to buy,” so he did a duck and cover. Moving on to retail, Finerman said that she bought into Abercrombie & Fitch call spreads. She said that their news today was “bad, not horrific,” and that today's reaction was “excessive.” Adami said that he would “take a shot,” on Abercrombie just on a valuation basis because he is expecting a “short-covering rally.” While retail in general performed poorly, department store chain JC Penney announced better-than-expected earnings.

Tech Moves Today - Intel (INTC), Microsoft (MSFT), Hewlett-Packard (HPQ)

Moving into the technology sector, Ratigan said that Intel, Microsoft and Hewlett-Packard “looked lovely” compared to financials. Finerman agreed, saying it was encouraging and that Microsoft deserved to come up a little because it had been beaten up excessively. Adami said that Intel's gains were wild and investors “can't argue with those numbers.” Next, guest Jeffrey Harte of Sandler O'Neill stopped by the show to discuss the financials. He said that right now “uncertainty is your enemy,” and that when it comes to auction rate securities, there “haven't been a whole lot of losses there yet.” He compared it to the CDO market and said that ARS are “not so bad.” Moving on, Harte said that there are more marks to come and that “housing is going the wrong way.” He continued we “may have a long road ahead of us,” and it is wise for investors to “watch for the turn.” Harte concluded that there is an “awful lot of cash on the sidelines,” and that there is going to be a “spring loaded recovery,” when the time is right.

The Dollar is the Trade

After not being seen in a while, the United States currency has been seeing some strength. Terranova said that it is at its highest level since Feb. 27 and that it “put oil in a headlock today.” He said to be cautious because investors do not believe the move yet. Finerman echoed his warnings, saying that she wouldn't add to her short position in the British Pound. Macke said it is best to “trade this off the technicals,” and you've “got to be long.” Adami agreed saying that the dollar is “the trade of the second half.” Terranova pointed to gold, which he said is "rolling over now." Bringing on options expert, Jon Najarian, "Fast Money," moved on. Najarian said that right now there are trades to be had in the market and that investors "can't decide if they are bullish, bearish." He said that it is not fear but there is no commitment on either side. Speaking on his most compelling trade, he agreed with Finerman on Capital One "on the short side." Najarian said that it is trading "six times normal volume, buying puts," and that its peers are down nearly 30% while COF is down only 8%.

Housing Stocks - Home Depot (HD)

Prices in housing continue to fall, which may actually be a “good” thing, as there are plenty of people waiting to buy homes out there, waiting for a level of affordability. Adami continued that “things seem to be slowing,” but he is not saying to “go get Home Depot tomorrow.” While he doesn't advise going long on Home Depot quite yet, but at these prices or lower from here, it starts to look good. Jeffrey, “the retail guy,” on the other hand, has a bleaker view: “Housing data is miserable.” He says housing stocks will bottom whether homebuilders have bottomed or not. Macke recommended that investors “run away from this sector.”

Auction Rate Securities – Merrill Lynch (MER)

CNBC's own Charlie Gasparino made an appearance giving his thoughts on Merrill's comments on auction rate securities. He said he does not feel it is a “balance sheet issue,” but rather a reputation issue. Gasparino said that Merrill is a very powerful brokerage house and that its brokers have complained to upper management and are demanding that they “make their clients whole,” because the brokers do not want clients pulling their accounts.

Breaking Story – Merrill Lynch (MER)

Melissa Lee interrupts with a breaking story linked to Citibank's settlement over sales of auction rate securities: In an after hours announcement, Merrill Lynch said they too would buy back auction rate securities from its retail clients, who currently hold $12B of those questionable securities. Merrill stated that this settlement would not affect its capital structure or hurt capital ratios, while creating liquidity for over 30,000 clients holding those securities. Macke disagreed saying “Things are no longer the same from where I'm sitting,” with Merrill having to buy back $12B in securities that “they had no interest in owning in the first place.”

Final Trade – Your First Move for Friday August 8.

Jeff Macke said to sell the Financial Select Sector SPDR (XLF).

Terranova says Research in Motion (RIMM) wants to move above 30.

Guy Adami said Johnson & Johnson (JNJ). 

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