You will encounter this error if you installed latest pip and setup tools (if you use tools like this: http://pip.readthedocs.org/en/latest/installing.html for pip installation).
The error pattern should look similar to : https://gist.github.com/saurabhsurana/db696248f5dddbfbd23d
The issue happened when new setup tools (setuptools-4.0) was released on June 1st.
Work around here is to revert back to setuptools 3.6, then things should work fine for you.
pip install -U "setuptools==3.6"