THE DISTILLERY: Obama's cliffhanger

After President Barack Obama's night of celebration, the hangover has quickly kicked in. Australia's commentariat has promptly shifted its focus to the difficult fiscal cliff negotiations that lay ahead, picking apart the potential economic and market ramifications. Closer to home, jotters pounce on reports BHP Billiton is stepping up its search for a new chief executive, and put Macquarie Group's disruptive mortgage deal with Yellow Brick Road under the microscope.

But first, the Australian Financial Review's Tony Boyd and Jennifer Hewett agree Obama's first priority must be to tackle the fiscal cliff. Boyd notes the discussions are critical to save the US from a severe recession, while Hewett says they'll be the true test of Obama's ability to bring together Democrats and Republicans.

The Australian's John Durie is similarly concerned about fiscal cliff negotiations, which could whack the stockmarket, but history seems to be on Obama's side.

"The good news is history, as documented by Deutsche Bank, says close elections result in short-term rallies on the stockmarket. History also says Democratic White Houses are better for the bourse, with an average 7.8 per cent gain on the US market against just 3 per cent under Republican White Houses."

The Australian Financial Review's Philip Baker even expects some local market wins from Obama's tax plans.

"Stocks paying a decent dividend on Wall Street have been whacked over the past few weeks due to Obama's plan to tax them at 40 per cent, a hefty increase from their current level of 15 per cent. It's one way of reining in the deficit. It has also led to some speculation that offshore investors might find the Australian sharemarket with its high dividend yields more appealing. Against that theory is the fact that the large Australian defensive and yield stocks are now on quite high multiples when compared with their global peers and it's domestic investors, not foreign investors, that win from high pre-tax yields on local stocks."

BHP Billiton is never far from the minds of Australia's scribes, and so when reports emerged offshore that the mining giant was searching for a new chief executive, the commentariat was quick to pounce. This morning, one jotter reckons it's a sign of boardroom tensions, while others argue it's nothing more than good governance. Either way, the discussion has produced an interesting list of potential successors.

Also this morning, there are questions about Macquarie Group's mortgage deal with Yellow Brick Road and, of course, Barack Obama's re-election. Will it be four more years of the same partisan bickering?

But first, Elizabeth Knight picks up on a report in the Financial Times suggesting BHP Billiton has stepped up its search for a replacement for chief executive Marius Kloppers. Knight thinks it comes down to a clash of character.

"Those who know Kloppers suggest there is a major difference in style between he and his chairman [Jac Nasser] — the latter being more entrepreneurial and perhaps less focused on process. There have certainly been lengthy delays to the approvals/decisions on many of BHP's large projects such as the expansion of Olympic Dam and expansion of the Port Hedland harbour and there is a perception that the company is not nimble enough in making decisions or developing projects."

However, Business Spectator's Stephen Bartholomeusz asks why it's newsworthy that BHP is planning for life beyond Kloppers.

"It is not exactly news that BHP conducts succession planning or that Jac Nasser leads that process. Like any competent board of a large company — and BHP has a board that prides itself on its governance — the group has a continuous process of succession planning, not just for its chief executive but for several layers of its senior executive ranks and, indeed, for the board itself. With Kloppers having held the CEO role for five years already — he was appointed CEO in October 2007 — he is probably closer to the end of the tenure than to its beginning and one would expect the succession planning itself to take on a sharper edge."

The Australian's Barry Fitzgerald is similarly unsurprised that BHP would be planning for its future. The only question in his mind is whether Kloppers will be gone within 24 months, as reports have suggested.

"Given he already has five years under his belt — and BHP CEOs in recent times haven't lasted that long — it seems to be a fairly safe bet. By then it will be known whether last year's ill-timed push into shale gas-oil has the upside potential that BHP says it does. If BHP comes close to the oil production targets it thinks it can achieve, it will be transformational stuff for the company, and for Kloppers. Without it, he will ride off, and be remembered as the cerebral Afrikaaner vegetarian, the guy with a compulsion for clean desks and micro-managing office eating habits — and the one who failed to pull off the big [Rio Tinto] deal."

At the Australian Financial Review, Jamie Freed wonders which names the search will throw up.

"...four internal contenders – non-ferrous head Andrew Mackenzie, ferrous and coal head Marcus Randolph, aluminium and nickel boss Alberto Calderon and petroleum boss Mike Yeager – have been meeting with investors more than was previously typical. ... External candidates for the BHP role are expected to include senior executives at major mining and petroleum companies. Rio Tinto chief financial officer Guy Elliott, who has said he will depart that company by the end of 2013, is well regarded by the market and viewed as a possible contender. However, he is also in line to be the next chairman of Royal Dutch Shell, which would not be possible if he took on the BHP role. Other potential external candidates could include senior executives at BG, such as executive vice president Ashley Almanza or chief financial officer Fabio Barbosa."

The other big story of the day is Macquarie's mortgage deal with Yellow Brick Road, which will see Australia's largest investment bank encroach on space held sacred by the big retail lenders. But Fairfax's Adele Ferguson wonders, why now?

"It is an interesting move given competition in retail banking is ferocious and the big four banks have the advantage over the rest of the banking sector in that they can access debt more cheaply than those with lower credit ratings. The big four have a credit rating of AA, while Macquarie Bank has a rating of A from Standard & Poor's, A2 rating from Moody's and an A rating from Fitch."