This conversation with the unnamed man serves a few purposes — one is to set up a surprise about the “photo girl” you won’t really get until Episode 4– but it also showcases Mulligan’s alpha personality, and the eagerness with which others approach him with the latest news.
Mulligan’s miming the sign of the cross might seem a little unclear. One reason is that there is a swimmer we’ve left out of the comic — an old man who climbs up a rock next to Mulligan and who is likely a priest, so Mulligan may be signalling that to the swimming man. He may also be making a joke (as several people do during the day) about Stephen’s mourning dress and hat making him look like a priest.
Textual trivia. In the Rosenbach Manuscript of Ulysses, the line “red-headed women buck like goats” is followed with “and all creation simply gloats.” Now you know.