Could it be a problem with pip and it's vendored html5lib version incompatibility? There is one bug report in pip repo about Anaconda patching pip that seems to cause this error : https://github.com/pypa/pip/issues/4902 .

Can you please share the pip and python version to see if I can reproduce this? Is the pip being used part of the one at 3.6 release?

./venv/bin/pip --version

I am using Python 3.6.4 from homebrew. I can reproduce this is by manually editing ./venv/lib/python3.6/site-packages/pip/_vendor/html5lib/_inputstream.py and removing transport_encoding from HTMLBinaryInputStream's constructor. 

./venv/lib/python3.6/site-packages/pip/_vendor/html5lib/__init__.py contains the version number of html5lib. Mine is 1.0b10. 

Sample error I got similar to the report : 

➜  Doc git:(master) ✗ ./venv/bin/pip install sphinx
Collecting sphinx
Exception:
Traceback (most recent call last):
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/basecommand.py", line 215, in main
    status = self.run(options, args)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/commands/install.py", line 324, in run
    requirement_set.prepare_files(finder)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/req/req_set.py", line 380, in prepare_files
    ignore_dependencies=self.ignore_dependencies))
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/req/req_set.py", line 554, in _prepare_file
    require_hashes
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/req/req_install.py", line 278, in populate_link
    self.link = finder.find_requirement(self, upgrade)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/index.py", line 465, in find_requirement
    all_candidates = self.find_all_candidates(req.name)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/index.py", line 423, in find_all_candidates
    for page in self._get_pages(url_locations, project_name):
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/index.py", line 568, in _get_pages
    page = self._get_page(location)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/index.py", line 683, in _get_page
    return HTMLPage.get_page(link, session=self.session)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/index.py", line 811, in get_page
    inst = cls(resp.content, resp.url, resp.headers)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/index.py", line 731, in __init__
    namespaceHTMLElements=False,
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/_vendor/html5lib/html5parser.py", line 35, in parse
    return p.parse(doc, **kwargs)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/_vendor/html5lib/html5parser.py", line 235, in parse
    self._parse(stream, False, None, *args, **kwargs)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/_vendor/html5lib/html5parser.py", line 85, in _parse
    self.tokenizer = _tokenizer.HTMLTokenizer(stream, parser=self, **kwargs)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/_vendor/html5lib/_tokenizer.py", line 36, in __init__
    self.stream = HTMLInputStream(stream, **kwargs)
  File "/Users/karthikeyansingaravelan/stuff/python/cpython/Doc/venv/lib/python3.6/site-packages/pip/_vendor/html5lib/_inputstream.py", line 151, in HTMLInputStream
    return HTMLBinaryInputStream(source, **kwargs)
TypeError: __init__() got an unexpected keyword argument 'transport_encoding'
You are using pip version 9.0.1, however version 19.1 is available.
You should consider upgrading via the 'pip install --upgrade pip' command.