[BretWeir]

Does your wife take her for a walk before she leaves the house? How late is her last walk the night before? If she needs to go outside to take care of business, that might be what's causing the early-morning stress.

Also, crating could be a solution here. We have two small dogs who are out during the day but sleep in dog crates. I thought it was kind of strange at first, but my wife, who's a dog guru (she's done literally hundreds of hours of training, etc. with the dogs) talked me into it. It's actually not cruel at all -- the dogs like having a safe space all their own to go to, and they'll literally run into their crates when it's bedtime.

As for the walking issues, we had the same problem with one of our dogs. Our solution has been to carry a pocketful of dogs treats and as soon as we see another dog approaching, get our dog's attention with the treats and keep rewarding until the other dog has passed. After a while, the dog starts mentally connecting "another dog" with "I'm gonna get food," and looking to you as soon as another dog show up. Because they're anticipating/concentrating on the food, they forget about the other dog. When this starts happening regularly, you can taper off treats a bit, and just reward intermittently to reinforce the behavior.

If you're interested in at-home training stuff generally, Google "clicker training." It sounds goofy when you first read it, but it's really easy and has worked wonders with our dogs.