I'm back. Without knowing more about the actual dog and more of his interactions, I will make a judgement call that Teddy is displaying a fear based aggression. I believe part of this problem is that Teddy is not quite sure of his pack heirarchy and is NOT comfortable in strange things in his environment. He probably does not see you as the alpha pack leader but rather another member of the pack on the same level as he and his sister are. He feels it is his responsibility to protect you when you are walking but really doesn't like being in that role and is fearful someone will hurt either you or him. His natural defense is to bark and sound ferosious to frighten off intruders instead of realizing this is not something he has to do.

A couple things you can do is to work on getting Teddy to fully understand that you are the pack leader (not him) and that you will make decisions on your safety and his. Start by employing the Nothing is for free philosophy. Make him earn everything he gets including food and play time with his sister. Work on obedience commands such as sit and down. Anything else he knows can be used in getting rewarded for listening to you. You may even want to feed him by hand for a couple weeks to get him to realize you are the giver of all things he needs to survive in this world. Never let him eat before you or go out the door before you. You need to get him to realize you are leader and he is follower.

Along with this you can start a program of counter conditioning him to outside influences or stimuli. In counter conditioning you only reward behaviors that you want and no reward for unwanted ones. Make sure you have a very solid sit and down stay in a place where the dog is comfortable. Always reward for wanted behavior when the dog sits or downs on command. When the dog can sit consistently for 5 minutes, move to a place where there will be situations that will envoke the unwanted response in the dog. Give the Sit or preferrably down command to get the dog to focus on you and not the stimuli causing the problem. Immediately when he does what you ask, reward. The reward needs to be immediate and it needs to be with something the dog finds irrestible to eat.

Do not get to close the the stimulus that invokes the unwanted behavior. Work from a distance so the dog does not feel too fearful or aggressive to the point of not listening. Once you get the dog to listen at this distance, you can move closer. Your goal is to keep moving closer and closer while rewarding the dog for wanted behavior.

Consider using a halti or gentle leader for when you walk also. If the dog enjoys playing ball, when you see something that might invoke the unwanted behavior, get the ball or toy out and get the dog to focus on it. Before long the dog will associate treats when there is something frightening or unpleasant in his path and will begin associating pleasant things when this situations occur. I believe you will also notice a change when Teddy realizes you are in charge and he doesn't have to be.

Let me know if you have any questions on any of this. Keep us posted on your progress.