Bayern Munich is the favorite in the German league. However, things don't work that way in the Champions League. There are great teams in the Champions League. Last year, we saw Bayern playing as the absolute favorites but failing to win some matches, or playing very well against difficult teams and dominating the match, but failing to win the match. Kompany won the league title last year, but he needs to be even better this year for the UCL. That's why the Luis Diaz transfer was so important.
Yes you are actually right, Luiz Diaz transfer was very important in improving the attacking department of this Bayern Munich side but that doesn't changes anything much in the uefa champions league because it is a competition meant to be won by the best. This Bayern Munich side isn't stronger than Paris saint Germain that are the current champions, and the likes of Manchester city, Chelsea that are the current world champions, real madrid, Barcelona and the rest of other top side are a formidable threat in the competition, so Vincent company and his Bayern Munich side needs to do more if they want to win the uefa champions league next season.
Then as for the German bundesliga title, they are the clear favourite just as you have said already, but I may have to confess that the competition is not fair or it's better if I say that it's not balanced.
For the past 10 season, any team that try and challenge this Bayern Munich side will be weaken the following season or their after, so it's like they don't want Bayern Munich to have a major rival in the league, and to me, it's very sad and regrettable because rivalry and competitiveness is what makes the EPL the best in the world because every team is good enough to compete with the top guys, but the German bundesliga is the direct opposite of that.