As topo morto commented above, he is talking about you because of the honorific suffix "시" which can't be used for a speaker himself.
There will be lots of ways to react to that, but you can say either of
1. 에이, 농담하지 마세요 = You've gotta be kidding me, please don't or
2. 정말요? 고마워요 = Really? So kind of you to say that.