Equity values are at the high end of the valuation range: JP Morgan Chase's Jamie Dimon

While key economic indicators including inflation seem to be improving, there are other conditions such as persistent inflationary pressures that needs to be considered, he wrote.

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"All of the following factors appear to be inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of global trade, capital needs of the new green economy, and possibly higher energy costs in the future (even though there currently is an oversupply of gas and plentiful spare capacity in oil) due to a lack of needed investment in the energy infrastructure," the letter pointed out.

He wrote that there is too much focus on monthly inflation data and modest changes to interest rates. But, he pointed out, interest rates may be predetermined by all the factors he had listed above.

"Small changes in interest rates today may have less impact on inflation in the future than many people believe," he wrote.

JP Morgan Chase is prepared for a broad range of interest rates, from 2-8 percent, with "with equally wide-ranging economic outcomes — from strong economic growth with moderate inflation (in this case, higher interest rates would result from higher demand for capital) to a recession with inflation; i.e., stagflation".